Should you still have snacks in the breakroom? Yes, absolutely. Sales, marketing, and breakroom snacks are indirect costs that don’t factor into your COGS. Remember that your COGS only includes direct costs like parts and labor. Maybe you’ll even get to keep some of the saved cash as a bonus! Knowing your COGS helps you produce accurate balance sheets while impressing everyone with how much you know about accounting principles. Keep the cash flow going strong and everyone is happy.ĬOGS is important because it tells you how much you spend to make the things you sell. As a business, you make money by producing and selling goods.
