Skip to main content

administrative expenses Wex LII Legal Information Institute

By August 31, 2020May 3rd, 2023No Comments

administrative cost meaning

Her expertise covers a wide range of accounting, corporate finance, taxes, lending, and personal finance areas. As the saying goes, “You have to spend money to make money.” This phrase is oh-so-true when it comes to G&A expenses. We follow strict ethical journalism practices, which includes presenting unbiased information and citing reliable, attributed resources. This team of experts helps Finance Strategists maintain the highest level of accuracy and professionalism possible. Administrative overheads should, therefore, be charged to these two divisions.

Organizations may choose to include consulting and legal fees as an administrative expense as well. However, research and development (R&D) costs are administrative cost meaning not considered administrative expenses. To accurately project future SG&A costs, some companies attempt to forecast each individual component.


General and administrative expense is generally not considered to include research and development expenses, which are usually aggregated into a separate department. Business ExpensesBusiness expenses are those incurred in order to successfully run, operate, and maintain a business. Travel & conveyance, salaries, rent, entertainment, telephone and internet expenses are all examples of business expenses. Overhead refers to the ongoing business expenses not directly attributed to creating a product or service. Overhead costs include the costs of producing a good or service (e.g., supplies).

administrative cost meaning

Includes, in addition to Authority Administrative Costs that are limited to 1% of the gross annual bridge toll revenues, direct operating costs of the Authority and MTC for initial RM2 project management set-up costs. Direct CostDirect cost refers to the cost of operating core business activity—production costs, raw material cost, and wages paid to factory staff. Such costs can be determined by identifying the expenditure on cost objects. Operating profit is the total earnings from a company’s core business operations, excluding deductions of interest and tax. Any costs that don’t directly impact the business’s profit are considered G&A costs. Our writing and editorial staff are a team of experts holding advanced financial designations and have written for most major financial media publications.

Presentation of General and Administrative Expense

Administrative expenses are presented as part of operating expenses, which are deducted from gross profit or gross income to arrive at operating income before finance cost and taxes. Examples of these costs are executive salaries and bonuses, salaries and wages of personnel performing staff functions, professional fees, office supplies, and subscriptions. Insurance, depreciation, rent, and utilities may be categorized as manufacturing overhead, selling, or administrative expenses, depending on which business function they relate to. Interest is a finance cost, while income tax is presented separately. G&A is part of SG&A expenses or selling, general, and administrative expenses. A business’s SG&A is the total of all direct and indirect selling expenses and all general and administrative costs.

Variable administrative costs, on the other hand, do change depending on how much revenue a company is generating. For example, if you have more customers or clients paying for your services, your company will likely need to increase its spending on supplies like paper or printer ink to accommodate this increased demand. This type of cost is usually more relevant to service-based businesses since the number of customers or clients can fluctuate greatly from one month to the next.

Insuranceopedia Explains Administrative Charge

This team of experts helps Carbon Collective maintain the highest level of accuracy and professionalism possible. Let’s break it down to identify the meaning and value of the different variables in this problem. Harold Averkamp has worked as a university accounting instructor, accountant, and consultant for more than 25 years. General and Administrative Costsmeans those costs as so categorised in Annex “D”, the Accounting Procedure. Structured Query Language is a programming language used to interact with a database….

administrative cost meaning

What is the other name for administrative costs?

Operating expenses definition

Operating expenses, also known as selling, general and administrative expenses (SG&A), are the fixed costs your business incurs that are not directly related to production.

Leave a Reply

Close Menu