COGS (Cost of Goods Sold) section in the TurboTax programs asks for a number of things. Here's the breakdown.
Cost of Purchases - What *you* paid for the product you are selling. This includes all materials that become "a physical part of" the finished product.
Labor Costs - What you paid for someone to manufacture the product from start to finish. This person (or persons(s) *must* have physically touched the product you are claiming costs for in the "Cost of Purchases" box. If you have already reported your labor costs elsewhere, then you will *NOT* claim those labor costs here. For example, if what you paid a W-2 employee is already included in their W-2, or what you paid a 1099-MISC contractor is already reported and claimed elsewhere, you will *NOT* claim that labor cost here. To do so would be double-dipping.
Materials and Supplies - Items used in the manufacturing or sales prep that do not become a part of the finished product, but are not considered actual raw materials. For example, if you manufacture mirrors one of the last things you're going to do is clean that mirror before you package it. For that you will probably use Windex and paper towels. The Windex and towels do not become a part of the finished product. It is "consumed" during your manufacturing process. So this is a materials & supply expense. Other examples would include sand paper, abrasive rubbing compounds, etc.
Other Costs to Prepare for Sales - These are costs incurred that are not "a physical part of" the product being sold, yet are necessary in order to sell the product. This includes packaging materials, boxes, containers, displays, shipping costs, etc.
