Which of the following is NOT a component of COGS?

Cost of Goods Sold (COGS) refers to the direct costs attributable to the production of the goods sold by a company. COGS typically includes costs associated with manufacturing such as direct labor (like salaries of blue-collar workers), direct materials, and manufacturing overhead.

Interest paid on loans is not included in COGS since it does not directly relate to the production of goods. Interest is considered a financial expense, reflecting the cost of borrowing funds, rather than a cost incurred to create or sell products. Therefore, it is treated as an operating expense on the income statement, separate from the direct costs associated with production.

In contrast, manufacturing costs, transport costs, and salaries of blue-collar workers are integral parts of the cost structure that reflect the expenses directly tied to producing and delivering products to customers. This distinction emphasizes the importance of identifying which costs directly contribute to the production and sale of goods versus those that are operational or financial in nature.