Hitting reset button for companies is bringing the existing state of affairs back to normal, the time to hit the Reset button is when status quo or the existing state of affairs become unacceptable, when employee, employer and everything needs a wake-up call including you.
However the story of the Reset Button is an example of a noise caused by Cultural background, emotional interference, Communication skills, Poor listening skills.
The short-run is an imaginary short period in which all the inputs cannot be varied. There is at least one input that cannot be varied. So in the short run, there are some fixed inputs and some variable inputs.
The cost incurred on fixed inputs are fixed costs and that incurred on variable inputs are variable costs. So there are fixed costs and variable costs in the short run.
In the long run, all inputs are variable so all costs are variable as well.
Gross profit = net sales revenue - cost of goods sold. But what happens when your company doesn't sell any goods, specially if they only sell services and it is impossible to determine the COGS.
This is basically an accounting issue since the <u>IRS</u> defines COGS as:
<em>The cost of products or raw materials, including freight </em>
<em>Storage
</em>
<em>Direct labor costs (including contributions to pensions or annuity plans) for workers who produce the products
</em>
<em>Factory overhead the cost of inventory items sold </em>
So if your company doesn't sell any items from inventory, the IRS will not consider that your company incurred in COGS.
Reporting COGS is very useful for deducting business expenses, but it is not mandatory. Also, any expenses deducted as COGS cannot be deducted again as any other type of cost. So it is simply an accounting practice that helps certain industries to report their business expenses more clearly and in an orderly manner. But if it is too complicated to determine your company's COGS, then you can report your expenses in other ways and reduce your problems.
