In a nutshell:
Items/Equipment used in the production of product you will sell are assets and get listed in the Business Assets section and depreciated over time.
COGS needs a bit more of a breakdown.
Beginning of year (BOY) Inventory - What *you* paid for the inventory in your physical possession on Jan 1 of the tax year. If 2020 is your first year of business or the first year your business reports inventory, then your BOY Inventory Balance *MUST* be zero. It does not matter in what tax year the inventory was purchased either. Additionally, your BOY Inventory Balance must match exactly the prior year EOY (End of Year) Inventory Balance with no exceptions. (That's why in your first year, the BOY Inventory Balance has to be zero with no exceptions.)
End of Year (EOY) Inventory Balance - What *you* paid for the inventory in your physical possession on Dec 31 of the tax year. It does not matter in what tax year the inventory was purchased either.
Cost of Purchases - Apparently, TTX renamed this from"Cost of Goods Sold". Enter in this box what *you* paid for inventory you actually sold in the tax year. It does not matter in what tax year you paid for it either.
Purchases withdrawn for Personal Use - What "you" paid for inventory you decided not to sell *ever*.
Labor Costs - Typically this will be zero. If you have W-2 employees then you already claimed these costs as wages paid to your employees. If you paid a 3rd party contractor and issued them a 1099-MISC or 1099-NEC for what you paid them to produce your product, *and* you did not claim this business expense elsewhere, then you can claim it here.
Materials and Supplies - These are costs for things that are "consumed" in the production process, and they may or may not become "a part of" the finished product you sell. For example, nails, screws, washers. etc. would be examples of things that become "a part of" the finished product. But figuring costs such as "cost per nail" is a bit cumbersome. So if you purcased 6 boxs of nails at $10 a box and you used 5 1/2 boxes during the year, you can claim the cost of all 6 boxes here. Just make sure you don't claim that 1/2 box of left over nails you use next year in your production process.
Materials and Supplies also includes those items that are "consumed" during the production process, yet do not become "a part of" the finished product. Examples would be sand paper, furniture polish, mineral spirits, denatured alcohol, etc.
Other Costs to Prepare for Sales - This would include things like displays if you have a store front, as well as boxes and packaging, and possibly even shipping costs if not claimed elsewhere.
