Which label refers to the costs of buying or making the products a company sells?

• A. Cost of sales
• B. Selling expenses
• C. Administrative expenses
• D. Interest expense

Answer: (A)

The main idea is understanding which costs are tied directly to the goods that a company sells. The costs of buying or making the products are recorded as the cost of sales (often called cost of goods sold). These costs are matched with the revenue from sales to determine gross profit, since gross profit = net sales minus cost of sales. The other options describe different expense categories: selling expenses cover costs to market and sell the products, administrative expenses cover general overhead, and interest expense is a financing cost. Therefore, the label that refers to the costs of buying or making the products a company sells is cost of sales.