Question

This week we focused on manufacturing costs, but selling, general, and administrative (SG&A) costs are also important. Using the company you selected for the discussion forum question, what specific types of SG&A costs would the company incur? How would these costs be considered in product costing? As portfolio activities are to be self-reflective, please make sure to connect the portfolio assignment to: Your personal experiences. Reflect on how this assignment topic is applicable to and will benefit you. Course readings and any external readings. Discussion forum posts or course objectives. The Portfolio Activity entry should be a minimum of 500 words and not more than 750 words. Use APA citations and references if you use ideas from the readings or other sources.

I selected DANGOTE CEMENT COMPANY, which has its headquarters in Lagos, Nigeria.

Answer 1

Selling, general and administrative costs (SG &A) are also sometimes called as operating expenses. These are the costs that business pays that aren't directly tied to making or delivering product or service. It basically includes that anything you spend money on that isn't cost of goods sold (COGS). Example : let's suppose adit company sells soaps online. That particular company COGS are any costs directly related to making packaging and shipping the soaps - raw materials, the wages you pay your soap maker Cheryl, the fancy packaging paper you use , shipping costs, etc SG &A costs are reported on the income statement, the financial statement that business prepares to figure out how profitable it is.To calculate SG&A we have go through the company's books for that year and add up all of the non COGS interest or income tax expenses. SELLING EXPENSES : those are any sales or marketing expenses your business incurs. These include Advertising expenses, any wages or commission you lay to a sales person, payroll taxes travel and entertainment costs. GENERAL EXPENSES : these are anything that business spends money on that has nothing to do with COGS, selling, or administration. These include rent,utilities, bank and ATM fee expenses ADMINISTRATIVE EXPENSES: salaries of company executives, administrative staff, fees paid to on staff accountants, consulting fees. In product costing, SG&A to sales ratio tells us what percent of every dollar our company earned gets sucked up by SG&A costs. SG&A ratio = Total SG&A / total sales revenue When an external business advisor looms at a small business books one of the places they look for cost cutting opportunities is SG&A.it is usually one of the first place where business get sloppy with their penses are ordinary and necessary according to IRS we can write off SG&A expenses for the year in which we incurred. They tends to be the strong cost reduction pressure on general and administrative expenses since these costs don't contribute to sales and will have a negative impact on profits.A company that has a strong,centralized command and control management system is likely to spend more on general and administrative expenses than a business that has a decentralizes organizational structure.