The direct costs of producing the goods or services your business sells — typically materials, labor, and manufacturing overhead. Does not include operating expenses like rent or marketing.
What to check
Classify direct costs consistently. Moving a cost between COGS and operating expenses changes gross margin even when total net profit stays the same.
With $750,000 in sales and $450,000 of direct costs, gross profit is $300,000.
Where this connects to Impresa
You may encounter this concept when reviewing Financial Health. Start with the underlying inputs and check the applicable reporting period before interpreting the result.
Read the Financial Health guideDefinitions here explain the concept. Accounting treatments, formulas, and industry comparisons may vary. Use your own records and qualified advice for material decisions.