Whichever presentation approach is used, a company should be consistent in using the same form of presentation for all periods included in the financial statements. There are two parts to SG&A costs: selling expenses and general and administrative expenses. Sep 19 Central banks20 Dec 18 Central banks12 There were no. Selling, general, and administrative (SG&A) expenses account for the essential costs of running the day-to-day business operations. General and administrative expense ratio represents general and administrative expenses as a percentage of total revenue. Also, if there are any variable expenses among the selling and administrative expenses (such as commissions), they are moved up in the income statement, where they are included in the calculation of the contribution margin. General and administrative expense ratio is calculated by dividing general and administrative expenses related to underwriting activities by net premiums earned. The key difference in income statement presentation between the contribution approach and the traditional approach is that the contribution approach shifts all fixed production costs further down in the income statement. The Difference Between the Contribution Approach and Traditional Approach The contribution approach presents fixed and variable cost information, which is useful for breakeven analysis, while the traditional approach presents department information, which can be more useful when assigning costs to areas of responsibility. Both methods yield the same bottom line profit or loss information, but reveal different types of information while doing so.
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