Definition of Cost of Sales
Cost of sales is often a line shown on a manufacturer’s or retailer’s income statement instead of cost of goods sold.
The cost of sales for a manufacturer is the cost of its finished goods in its beginning inventory plus the cost of goods manufactured during the accounting period minus the cost of finished goods in ending inventory.
The cost of sales for a retailer is the cost of merchandise in its beginning inventory plus the net cost of merchandise purchased during the accounting period minus the cost of merchandise in its ending inventory.
The cost of sales does not include selling, general and administrative (SG&A) expenses, or interest expense.
