What does COGS stand for in relation to production costs?

Cost of Goods Sold, commonly referred to as COGS, represents the total direct costs associated with the production of goods that a company sells. This includes expenses such as raw materials, direct labor, and manufacturing overhead directly tied to the production of these goods. Understanding COGS is essential for calculating gross profit, as it allows businesses to evaluate how effectively they are managing production costs relative to their sales revenue.

The other options do not accurately reflect established financial terms or accounting principles. "Cost of Great Services" does not pertain to a recognized accounting concept, and while "Capital of Goods Sold" might imply a focus on investment, it misrepresents the nature of COGS which is focused on direct costs of sold inventory rather than capital or assets. "Calculation of Goods Standard" is ambiguous and does not define an established term in finance or accounting related to production costs. Thus, the correct answer provides a clear and accurate definition relevant to understanding production costs in a business context.