Which of the following best describes the purpose of calculating COGS?

سی او جی ایس کا حساب لگانے کے مقصد کو درج ذیل میں سے کون بہترین بیان کرتا ہے؟

To determine the total revenue

To measure the efficiency of production

To determine the cost of goods available for sale

To measure the direct costs associated with the production of goods sold

Explanation

Calculating COGS (Cost of Goods Sold) helps businesses determine the direct costs associated with producing and selling their products or services.

By calculating COGS, businesses can:

Determine the profitability of their products or services
Set prices appropriately
Identify areas for cost reduction and optimization
Make informed decisions about production and inventory management