selling expenses vs general and administrative expenses

SELLING EXPENSES VS GENERAL AND ADMINISTRATIVE EXPENSES HOW TO

Management can then adjust the admin expenses and staff personnel to lower the general and admin expenses. What is going wrong? After looking at the expenses, management found out that general and admin expenses were three times what selling expenses were. The company is losing money every month, but the sales are through the roof. How much overhead does it take to sell a guitar? Who knows!ĭividing operating expenses into selling and general and administrative expenses helps management plan its strategy and run the business more effectively. You can’t really even allocate them back to sales. As you can see, none of these expenses really promote or help make sales. Administrative expenses are the expenses that an organization incurs not directly tied to a specific function such as manufacturing, production or sales. These expenses include things like overhead, management salaries, accounting fees, and other expenses used to run the business. 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. General and administrative expenses include all of the non-selling expenses. Selling expenses can include marketing, advertising, promotions, window displays, delivery costs, and any other cost that is directly associated with making sales like salesman salaries. Administrative costs include salaries for staff and executives, as well as fees or salaries for services such as IT, accounting, or attorneys. General expenses would be things such as rent, utilities, office supplies, and insurance. Selling expenses are expenses that contribute to, you guessed it, selling products. Selling costs can include advertising, sales commissions, and promotional costs. What Does General and Administrative Expenses Mean? Selling, general and administrative expenses (or SG&A) are the total of both direct and indirect selling expenses in addition to the administrative expenses. Two of the main operating expense categories are selling expenses and general and administrative expenses.

SELLING EXPENSES VS GENERAL AND ADMINISTRATIVE EXPENSES HOW TO

In order to understand how to improve the operations of a business, the operating expenses are usually grouped into different categories based on their how they relate to the business operations.

Definition: Businesses have tons of expenses during the year.

Selling expenses vs general and administrative expenses