The costs associated with goods sold are a product cost for a manufacturing firm. They are the costs associated with the product and recorded in an
inventory account until the product is sold.
Both accounts represent the cost of the goods acquired from an outside supplier which include all costs necessary to ready the goods for sale (in
merchandising) or production (in manufacturing).
The merchandiser expenses these costs as the product is sold as no additional costs are incurred. The manufacturer transforms the purchased materials into
finished goods and charges these costs along with conversion costs to production (work in process inventory). These costs are expensed when the finished
goods are sold.