Where does general expense come in a cost sheet? General expenses are the overhead costs that an organization incurs on a daily basis. Unlike administrative and sales expenses, general expenses are not directly related to the products and services that the organization produces. These costs are incurred on support activities that help in the core operation of the business. For example, office rent is a general expense and is reported in the income statement regardless of the amount of production.
General and administrative expenses are costs that don’t directly impact revenue or profit margins and increase with the business’s growth. These costs are typically fixed and don’t vary based on sales or production levels. Unlike revenue and sales, general and administrative expenses don’t fluctuate with the level of production. General and administrative expenses are comparable to overhead, which refers to the costs that are incurred in producing goods and completing tasks.
In a cost sheet, SG&A expenses can be either grouped as a single line item or broken down into individual lines. For example, rent is likely to be fixed at the same dollar amount every period, while advertising and sales commissions may vary with strategic decisions made during a particular period. For this reason, managers may decide to report these separately. But what exactly are these expenses? They can be broken down into two types of costs: direct and indirect. Direct selling expenses occur whenever a product or service is sold, while indirect selling costs come from other costs. Direct selling expenses, on the other hand, are incurred when an employee is hired to sell the product or service. Such costs are usually variable.
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