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looking again at Apple, what are specific types of SG&A costs would Apple incur ? how...

looking again at Apple,
what are specific types of SG&A costs would Apple incur ?
how would these costs be considered in product costing like iphone ?


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Answer #1

SG&A basically stands for selling, general and administrative expenses. SG&A are all those cost which are not directly attributable to the manufacturing of the product or providing service. Since APPLE is a mobile phone manufacturer as well as software company, all the cost which are not directly linked to manufacturing an Iphone or providing software service can be a part of selling, general and administrative expenses.

SG&A for a company like Apple can be:

Wages for sales people,marketing, advertisement, commission on sales, events for promoting sales, after sales customer support service, rent, utilities, office supplies, computer (outside of manufacturing), business travel e.t.c.

For any company selling general and administration cost has to be kept to the minimum because they impact the profitability. These cost are not directly attributed to the manufacturing of the iphone but they do have to be considered when deciding what is the profit margin per Iphone ccompany want to have. Let's say for example the cost of manufacturing directly attributable to Iphone is $500 dollar and Indirect expenses are $200 per Iphone. The total cost of manufacturing is $700. Now if APPLE want 30 % profit margin per product then the price of the Iphone would be around 700*(1.30) = $910.

The pricing of product depends not just on the cost and profit margin but also on the market standing and reputation of the company and it's product. SG&A does impact the final pricing of the product.

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