What is cost of goods sold in SAP EPM-SCP - Supply Chain Performance Management?

SAP Term: cost of goods sold

• Component: EPM-SCP

• Component Name: Supply Chain Performance Management

• Description: Includes the direct costs attributable to the production of the goods sold by a company. This amount includes the materials cost used in creating the goods along with the direct labor costs used to produce the good. It excludes indirect expenses such as distribution costs and sales force costs. CoGS appears on the income statement and can be deducted from revenue to calculate a company's gross margin.

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• Key Concepts: 
  Cost of Goods Sold (COGS) is a term used in the Supply Chain Performance Management (EPM-SCP) component of SAP to refer to the total cost associated with producing and selling a product. This includes the cost of materials, labor, and overhead expenses. COGS is an important metric for businesses to track, as it helps them understand their profitability and make informed decisions about pricing and production.
  
  How to use it: 
  In SAP EPM-SCP, COGS can be tracked by setting up a cost center for each product or service. This cost center will track all costs associated with producing and selling the product or service, including materials, labor, and overhead expenses. The cost center can then be used to calculate the total COGS for each product or service.
  
  Tips & Tricks: 
  When setting up a cost center for COGS tracking in SAP EPM-SCP, it is important to ensure that all costs associated with producing and selling the product or service are included. This includes not only direct costs such as materials and labor, but also indirect costs such as overhead expenses.
  
  Related Information: 
  COGS is closely related to other financial metrics such as gross profit margin and operating profit margin. It is also important to consider other factors such as pricing strategies when making decisions about production and pricing.