What Causes Cost of Goods Sold To Increase / Decrease

There are many causes due to which Cost of Goods Sold or Cost of Sales increases.

Some Common and important causes are mentioned below:

(i) Increase In Unit Cost Per Unit

When the prices of products increase due to inflation, then the unit cost of various products increases due to which cost of production increases that ultimately increases the cost of sales of products. But if the economy is growing well means, when there is boom period, then cost of sales decrease.

(ii) Lack of Technology

When there is manual working without the use of technology, then cost of working increases which ultimately increases the cost of production as less work is done with maximum amount of cost due to manual working while technology reduces workers cost and improve the working time with minimum cost. By adopting advanced technology, we can minimize the cost of sales as we may reduce workers costs and increase the working performance with minimum amount of cost.