What is included in COGS varies depending on the industry. In highly service oriented sectors employee salaries are often included in COGS.
Oct 08 2013 03:29 PM
Subtracting COGS from Revenue will give you the Gross Profit (Revenue-COGS). While analyzing companies this is a very important component, since this determines "flow-through" margins - how much money is left over to fund the conmpany's operations after the product manufacturing cost has been paid off.
Technology companies such as Google have very gross margins (70%+). Infrastructure companies such as Ford have low gross margins (<40%)