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QuestionsCategory: Financials QuadrantCOGS for alphabet
redvolver asked 2 years ago

Hi i was reading up on the Gross profit segment under Financial quadrant but do not quite understand why COGS for Alphabet only consider the cost of revenue and not the research and development component. I understand that there is no product but more of services, but shouldn’t r & d be part of revenue cost as well, and hence under COGS?
Sorry just want to be clear with the definition in case I miss something.
I do understand including that component does not make a huge difference.

1 Answers
Victor Chng answered 2 years ago

Hi Redvolver,

The definition of COGS is the direct costs of producing the goods or service. Research & Development (R&D) is an indirect cost hence it should be classified under operating expense.

redvolver replied 2 years ago

Ok thanks Victor!