This item includes the total cost of purchasing the product in the case of wholesalers and retailers, and the total cost of manufacturing the product in the case of manufacturers. Service organizations will often not have a "Cost of Sales" or "Cost of Gods Sold" account. In that case, include the total of all costs of producing the service. For manufacturers, this item should include not only raw material and direct labor costs, but also manufacturing overhead. If Cost of Sales and Operating Expenses are lumped together, include the total in the Operating Expenses field.

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