Composition of management expenses
Posted: Sun Jan 19, 2025 4:21 am
Administrative Expense – management (or so-called general business) expenses that do not go directly to the production, storage and sale of goods (services), but are necessary to ensure the viability of the company.
In particular, these are:
salaries for management and office staff (cleaners, accountants, etc.);
office expenses (rent, depreciation, tea, coffee, etc.);
providing communications (telephone network, Internet, regular mail);
transportation expenses chinese student data package of office employees (maintenance of the director's car, purchase of travel tickets, money for corporate taxis, etc.);
payment for representative services (if these expenses are not included in the sales item for a particular product);
other expenses that are not related to the production, storage and sale of goods.
Simple examples of management and non-management expenses: money spent on the salary of the shop manager is classified as production expenses. After all, this is a specialist whose activities are directly related to ensuring the functioning of production. But the salary of the general director is already included in the item of management expenses. Their main difference from production is that the cost of the manufactured product depends on the latter. Management expenses are not reflected in the cost, but can be indirectly included in its composition.
Cost price
Source: shutterstock.com
Management expenses of different companies are usually different. In each specific case, the type of activity matters. In particular, the salary of an accountant is usually related to general business expenses, but companies providing accounting services include it in the cost price (of these services). Or, for example, a call center makes payments for telephony as production expenses, and at any other enterprise this is part of general business expenses.
That is, management expenses include funds used to ensure the functioning of the office and pay for the work of the administration (the so-called administrative and management expenses).
The calculation of the management expense item is carried out without reference to the company's income, because production and sales indicators are not important here. Most often, the overhead costs of the enterprise are limited expenses (not standardized). Limited expenses are understood as expenses for which a limit is set for a specific period of time.
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Alexander Kuleshov
General Director of Sales Generator LLC
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There are two main types of management expenses:
costs of maintaining the company's assets (rental payments, depreciation and repair of equipment, office maintenance);
funds invested in the development of the enterprise (salaries of managers, vacation and travel payments).
Both of these categories of expenses are entirely subject to planning, but if we compare them, the second one is still more difficult to foresee.
In particular, these are:
salaries for management and office staff (cleaners, accountants, etc.);
office expenses (rent, depreciation, tea, coffee, etc.);
providing communications (telephone network, Internet, regular mail);
transportation expenses chinese student data package of office employees (maintenance of the director's car, purchase of travel tickets, money for corporate taxis, etc.);
payment for representative services (if these expenses are not included in the sales item for a particular product);
other expenses that are not related to the production, storage and sale of goods.
Simple examples of management and non-management expenses: money spent on the salary of the shop manager is classified as production expenses. After all, this is a specialist whose activities are directly related to ensuring the functioning of production. But the salary of the general director is already included in the item of management expenses. Their main difference from production is that the cost of the manufactured product depends on the latter. Management expenses are not reflected in the cost, but can be indirectly included in its composition.
Cost price
Source: shutterstock.com
Management expenses of different companies are usually different. In each specific case, the type of activity matters. In particular, the salary of an accountant is usually related to general business expenses, but companies providing accounting services include it in the cost price (of these services). Or, for example, a call center makes payments for telephony as production expenses, and at any other enterprise this is part of general business expenses.
That is, management expenses include funds used to ensure the functioning of the office and pay for the work of the administration (the so-called administrative and management expenses).
The calculation of the management expense item is carried out without reference to the company's income, because production and sales indicators are not important here. Most often, the overhead costs of the enterprise are limited expenses (not standardized). Limited expenses are understood as expenses for which a limit is set for a specific period of time.
Increase Your Profits by 10X: 5 Key Metrics You Must Track
Alexander Kuleshov
Alexander Kuleshov
General Director of Sales Generator LLC
Read more posts on my personal blog:
After working with over 300 online projects , I can guarantee: monitor these metrics weekly and your company will not only survive, but also increase its profits by 10 times!
In the context of sanctions and crisis, knowing the ROI of your advertising decides whether your business will be successful. Tracking these 5 critical indicators is the key to your prosperity.
What you get for free:
5 Key Metrics to Increase Profits by 220%
The Secret ROI Formula: Instant Advertising Efficiency Calculator
Anti-crisis Solutions Matrix: Find the Perfect Strategy for Your Business in 15 Minutes
We have prepared all the documents and templates with formulas for you. And yes, it is FREE:
Download documents for free
Already downloaded
153324
There are two main types of management expenses:
costs of maintaining the company's assets (rental payments, depreciation and repair of equipment, office maintenance);
funds invested in the development of the enterprise (salaries of managers, vacation and travel payments).
Both of these categories of expenses are entirely subject to planning, but if we compare them, the second one is still more difficult to foresee.