This measure calculates the percentage of cost of goods sold (COGS) that comes from material costs. COGS represents the cost of purchasing raw materials and manufacturing finished products. This measure is part of a set of Supplemental Information measures that help companies evaluate additional variables not covered elsewhere for the "produce/manufacture/deliver product" process.
Material cost as a percentage of cost of goods sold
Cost of Goods Sold (COGS)
Cost of goods sold (COGS) is the amount on an income statement that represents the cost of purchasing raw materials and manufacturing finished products. This represents specific or direct manufacturing cost of material and labor entering in the production of finished goods. For merchandise companies, cost of goods sold represents the purchase price of items sold, as well as indirect overhead such as freight, inspecting, and warehouse costs. For service organizations, cost of goods sold may be referred to as Cost of Services.
Supplemental information is data that APQC determines is relevant to decision support for a specific process, but does not fit into the other measure categories such as cost effectiveness, cycle time, or staff productivity.