<P> When multiple goods are bought or made, it may be necessary to identify which costs relate to which particular goods sold . This may be done using an identification convention, such as specific identification of the goods, first - in - first - out (FIFO), or average cost . Alternative systems may be used in some countries, such as last - in - first - out (LIFO), gross profit method, retail method, or combinations of these . </P> <P> Cost of goods sold may be the same or different for accounting and tax purposes, depending on the rules of the particular jurisdiction . Certain expenses are included in COGS . Expenses that are included in COGS cannot be deducted again as a business expense . COGS expenses include: </P> <Ul> <Li> The cost of products or raw materials, including freight or shipping charges; </Li> <Li> The cost of storing products the business sells; </Li> <Li> Direct labor costs for workers who produce the products; and </Li> <Li> Factory overhead expenses . </Li> <Li> Depreciation </Li> </Ul> <Li> The cost of products or raw materials, including freight or shipping charges; </Li>

Is shipping included in cost of goods sold