3/24/2024 0 Comments Are account executives cogs or sga![]() ![]() Now you may be wondering, what exactly is a good benchmark SG&A ratio? 10%? 25%? If you’ve differentiated between sales and overhead, you’ll find it much easier to hone in on the area where you need improvement.Īn extra section on your income statement could save you hours of work down the road! Without differentiation, you may find yourself vigorously rummaging through your rent statements, advertising invoices, and salary records, trying to get a clue about what went wrong. What do you need to do to get them back to your benchmark next year? Imagine that, a couple of years into your operations, you notice that your SG&A expenses are 25% of your costs when your benchmark for them is 12%. Remember that the more specific you are with where your money is going, the better decisions you’ll be able to make for your business. You don’t have to, but you should want to. You may be asking, “Do I have to differentiate between the two on my income statement?” General and administrative expenses are what is commonly referred to as “overhead.” Think rent, utilities, salaries for management (excluding managers in your sales department), IT costs, legal costs, and the like. This includes the facilities used for your storefront, advertising, sales commissions, and sales director’s salary. Sales expenses involve everything it takes to make the sale. Both cannot be directly tied to the production of your product or delivery of your service, but they have some differences: There is also a difference between sales expenses and general and administrative expenses. the commission you pay your salespeople for each item sold.īoth are SG&A expenses, but your storefront cost is fixed while your commission cost is variable. They may be fixed or variable.įor example, think of the cost of your storefront where you sell items vs. Income statements provide an overview of revenues and costs at the accrual date.SG&A expenses are a type of operating expense, and they show up on the income statement. ![]()
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