Is administrative expense a direct expense?
From an accounting perspective, administrative expenses are considered an indirect expense because they are not directly related to the manufacturing of a product, such as an engineer or assembly line worker.
What goes under selling and administrative expenses?
Selling, General & Administrative (SG&A) Expense. … It includes expenses such as rent, advertising, marketing, accounting, litigation, travel, meals, management salaries, bonuses, and more. On occasion, it may also include depreciation expense, depending on what it’s related to. In an income statement.
Which of the following is not an administrative expense?
Which of the following is not an administrative expense in a manufacturing organization? Administrative expenses are the expenses that an organization incurs not directly tied to a specific function such as manufacturing, production or sales. stationaries aren’t administrative expenses.
Is repairs and maintenance an administrative expense?
List of Administrative Expenses. Salaries and wages cost of employees engaged in finance, accounts, human resources, information technology division, etc. … General Repairs and maintenance cost. Finance and insurance cost.
How can I reduce my administrative expenses?
How to Cut Administrative Expenses
- Don’t Purchase – Rent. The decision whether to own or rent property is generally based upon your scale of operations. …
- Limit Travel and Entertainment Expenses. …
- Telecommute. …
- Sublease Office and Yard. …
- Refinance Debt. …
- Eliminate Subscriptions and Memberships. …
- Cut Travel Costs. …
- Eliminate Paper.
How are administrative expenses calculated?
It is calculated by dividing the reported operating profit by the sales for that period. Alternatively, start with reported revenue and subtract cost of goods sold, SG&A and other overhead costs. Divide the operating income total by reported revenue and multiply it by 100 to express as a percentage.
What are examples of selling expenses?
Selling expenses include sales commissions, advertising, promotional materials distributed, rent of the sales showroom, rent of the sales offices, salaries and fringe benefits of sales personnel, utilities and telephone usage in the sales department, etc.
What are under selling expenses?
Selling expenses are the costs associated with distributing, marketing and selling a product or service. … Selling expenses can include: Distribution costs such as logistics, shipping and insurance costs. Marketing costs such as advertising, website maintenance and spending on social media.
What are the general and administrative expenses?
General and administrative expenses are costs that contribute to the overall operations of the company and can’t really be directly related back to selling or making sales. These expenses include things like overhead, management salaries, accounting fees, and other expenses used to run the business.
What are general expenses?
General expenses are the costs a business incurs as part of its daily operations, separate from selling and administration expenses. … Examples of general expenses include rent, utilities, postage, supplies and computer equipment.
What is the difference between operating and administrative expenses?
The primary difference between an operating expense and an administrative expense is that types of operating expenses are related to the departments that produce products and services whereas administrative expenses are more general and not necessarily specific to a department within the company.
Is depreciation included in administrative expenses?
Depreciation could be an administrative expense, but it can also be a selling expense, and a part of the cost of manufacturer’s products. … For example, the depreciation on the building and furnishings of a company’s central administrative staff is considered an administrative expense.