Definition of Administrative expenses:
Administrative expenses are expenses an organization incurs that are not directly tied to a specific function such as manufacturing, production or sales. These expenses are related to the organization as a whole, as opposed to individual departments or business units. Administrative expenses include salaries of senior executives and costs associated with general services, for example, accounting and information technology. They tend to be unrelated to gross margins.
Alternative term for administrative cost.
Companies incur administrative expenses to perform basic operations, increase efficiency or comply with laws and regulations. On the income statement, administrative expenses appear below cost of goods sold and may be shown as an aggregate with other expenses such as general or selling expenses.
How to use Administrative expenses in a sentence?
- Our net income has recently been affected by an increase in administrative expenses in our attempt to provide better customer service to our client base.
- The administrative expenses for the non-profit were considerably higher than expected so, yesterday, an investigation was launched into their operations.
- Some level of administrative expenses will always be incurred as a necessary part of operations.
- The largest companies spend might spend millions of dollars on administrative expenses because there are so many small costs that arise in their daily operations.
- Administrative expenses are often the first identified for budget cuts, because they do not directly impact a company's main business functions.
- Management may allocate administrative expenses to its business units based on a percentage of revenue, expenses or other measures.
- Administrative expenses are costs incurred by a business that are not directly related to a specific business function.
Meaning of Administrative expenses & Administrative expenses Definition