Cost of revenue

Cost of revenue is the total cost of producing and distributing of products and services of a company.

Cost of revenue can be found in income statement of a company. Generally, any costs that are directly connected with manufacturing and distribution of goods and services can be added to cost of revenue (i.e. direct costs). Indirect costs (e.g. depreciation, salaries paid to management or other fixed costs) are not included.

Cost of revenue can be termed as the overall cost included in the manufacturing as well as the distribution of the product finally to the customer. Also, any cost incurred while production or distribution can be added to the cost of revenue.

Cost of revenue is different from Costs of Goods Sold (COGS) in the way that it includes additional costs such as distribution, marketing and other.

Example

Definition of cost of revenue in a Facebook annual report:[1]:40

"Cost of revenue. Our cost of revenue consists primarily of expenses associated with the delivery and distribution of our products. These include expenses related to the operation of our data centers, such as facility and server equipment depreciation, energy and bandwidth costs, and salaries, benefits, and share-based compensation for employees on our operations teams. Cost of revenue also includes credit card and other transaction fees related to processing customer transactions, amortization of intangible assets, costs associated with data partner arrangements, and cost of virtual reality platform device inventory sold."

Cost of revenue of Facebook can also be found on such resources as Yahoo! Finance[2] and Google Finance.[3]

References

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