Selling General and Administrative Expense (SG&A)
The financial accounting term selling, general, and administrative expense, or SG&A, is used to describe the costs associated with selling a product or providing a service, and the general expenses associated with running a business. SG&A for a company can be found on the income statement.
Examples of selling, general, and administrative expense include office supplies, back office labor such as accounting, and other labor not associated directly with the manufacture of a product, or supplying a service. It includes sales salaries, payroll costs, advertising, as well as utilities (electricity, water, heating fuels).
Selling, general, and administrative expense is a measure of the overhead expenses required to support operations. In general, SG&A and the cost of goods sold, which includes direct labor and raw materials, are the two largest cost categories found on the income statement. SG&A is often referred to as company “overheads,” and is frequently targeted for cost-cutting measures by management teams.