Also, financing costs like interest payment and interest income are not part of SGA. While SGA includes costs unrelated to production and delivery of goods, it does not include research and development expenses. Other departments include HR (especially one that manages work force used for non-production duties). The expenses under SGA come from certain departments of a company, which include the corporate affairs department (which incurs corporate expenses), the accounting and legal departments (which incur legal and accounting expenses),and the sales and marketing departments(which incur sales and marketing expenses). Selling General Administrative Expenses SGA Formula The second type of costs is those whose influence on product development and delivery is minimal. When preparing the income statement of the company, accountants bundle together all expenses that directly affect production and delivery of goods into the cost of goods sold (COGS) line. On the one hand, there are the expenses related to production and delivery of goods/services. In business, a company will incur two major types of costs. Usually, this line of expenses includes all costs that a business incurs that arise from activities unrelated to production of goods/services. Alternatively, accountants refer to this expense as operating expenses. What Is Selling General Administrative Expenses?ĭefinition: Selling general administrative (SGA) expenses refers to the money spent on operating a business.
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