(10) Cost of sales
Accounting and measurement policies
Cost of sales
The cost of sales primarily includes the cost of manufactured products sold as well as the merchandise sold.
Cost comprises the following items: directly attributable costs, such as cost of materials, personnel, and energy costs, depreciation and amortization, overheads attributable to the production process, inventory impairment losses and their reversals.
Cost of sales included amortization of intangible assets (excluding amortization of internally generated or separately acquired software) in the amount of € 210 million (2019: € 188 million). Material costs amounted to € 3,074 million in 2020 (2019: € 2,743 million) and were largely reported under cost of sales.
Impairment losses on inventories in 2020 amounted to € 312 million (previous year: € 275 million); reversals of impairment losses came to € 97 million (previous year: € 74 million).
The increase in impairments compared with the previous year was primarily attributable to the Life Science business sector. Falling demand for part of the product portfolio due to the Covid-19 pandemic led to an increased need for impairments.