![]() Indirect costs incurred in manufacturing operations are known as manufacturing overhead, while indirect costs incurred in the general and administrative area are known as administrative overhead. If a period cost, classify it as a selling expense or a general and administrative expense. If a product cost, classify it as direct materials, direct labor, or factory overhead. Classify each cost as either a product or period cost. Examples of indirect costs are accounting and legal expenses, administrative salaries, office expenses, rent, security expenses, telephone expenses, and utilities. Study with Quizlet and memorize flashcards containing terms like A car manufacturer incurs the following costs. General and Administrative Expenses (G&A): These are the costs related to the overall operations of a company that cannot be directly traced to a product or. Indirect costs do not vary substantially within certain production volumes or other indicators of activities, and so are considered to be fixed costs. ![]() ![]() It is useful to identify indirect costs, so that they can be excluded from short-term pricing decisions where management wants to set prices just above the variable costs of products. Instead, indirect costs are needed to operate the business as a whole. Examples of cost objects are products, services, geographical regions, distribution channels, and customers. Administrative expenses are the expenses that an organization incurs not directly tied to a specific function such as manufacturing, production or sales. SG&A is reported on a businesss income statement and reflects the sum of all selling expenses. Here are the categories in further detail: Labor costs These include direct and indirect labor costs. SG&A stands for Selling, General & Administrative Expense. This includes salaries administrators, finance, payroll, middle and senior managers, etc. The manufacturing costs include labor, materials and overhead. Overhead costs such as general administrative expenses and marketing costs are not included in manufacturing overhead costs. Sometimes called General and Administrative Expense (G&A). Indirect costs are costs used by multiple activities, and which cannot therefore be assigned to specific cost objects. A manufacturing cost comprises all costs associated with producing a product or service, such as the resources acquired during production. Overhead is an accounting term that refers to all ongoing business expenses not including or related to direct labor, direct materials or third-party expenses that are billed directly to customers.
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