SG&A Expense Selling, General & Administrative Guide, Examples

sg&a meaning

SG&A includes almost every business expense that isn’t included in the cost of goods sold (COGS). COGS includes the expenses necessary to manufacture a product including the labor, materials, and overhead expenses. SG&A costs are the residual expenses necessary to run the organization and incur costs less specifically tied to the cost of making the product.

  • Indirect selling expenses occur throughout the manufacturing process and after the product is finished.
  • Claiming your expenses are too low could prevent you from receiving much-needed tax breaks, but claiming too much could mean you find yourself ultimately owing more than you expected.
  • Selling expenses included in SG&A are often divided into direct and indirect costs.
  • Departments like human resources and information technology support the business but do not take a direct role in product creation.
  • In an income statement, gross profit less SG&A (and depreciation expense) equals the operating profit, also known as earnings before interest and tax (EBIT).

As part of its Q financial reporting, Apple reported $12.809 billion of operating expenses for the quarter. Of this, $6.797 billion was research and development, while $6.012 billion was selling, general, and administrative. Although the company does state that increases to SG&A from prior periods relates to headcount, advertising, and professional services, there is little more transparency beyond these notes. They are incurred in the day-to-day operations of a business and may not be directly tied to any specific function or department within the company. They are usually fixed costs that are incurred, disregarding the amount of sales or production incurred during a certain period.

Real-World Examples of SG&A Expenses

Singapore is also a member of the United Nations, the World Trade Organization, the East Asia Summit, the Non-Aligned Movement, and the Commonwealth of Nations. SG&A includes costs related to selling, general, and administrative expenses. These fall into a specific category of operating expenses, and may not include all those involved in your operating budget or cost of goods sold.

sg&a meaning

Both encompass the expenses necessary to operate a business independent of the costs to manufacture goods. The president is directly elected by popular vote for a renewable sg&a meaning six-year term. Companies may aggregate all of these expenses in a single SG&A line, or it may segregate selling costs from general and administrative costs.

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These are the lowest points the exchange rate has been at in the last 30 and 90-day periods. These are the highest points the exchange rate has been at in the last 30 and 90-day periods. SG&A expenses as a percent of revenue are generally high for healthcare and telecommunications businesses but relatively low for real estate and energy. Our tax professionals will strategize with you and put a plan together to properly file & submit all necessary paperwork to the IRS on your behalf.

  • For example, companies are often required to maintain insurance and may find it impossible to operate without incurring a cost of maintain its headquarters.
  • It’s important to note that not all expenses have been recorded when calculating operating expenses.
  • These costs don’t relate directly to selling products or services but rather to the general ongoing operation of the business.
  • SG&A includes costs related to selling, general, and administrative expenses.
  • You can find your sales ratio by dividing your total SG&A costs incurred by your total sales.