Cost of Revenue

Cost of Revenue = Direct materials + Direct labor + Manufacturing overhead + Other direct costs

Generally, lower values are better. Lower values may indicate better value, less risk, or more efficient operations.

• 1Lower cost of revenue relative to sales improves gross margin.
• 2Monitor trends for input-cost inflation or efficiency gains.

Subtracted from revenue to arrive at gross profit.

• Operating Expenses
• Other Operating Expenses
• Research & Development (R&D)
• Depreciation & Amortization
• Interest Expense