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Is Office and Administrative expenses part of COGS?

AaMir ` (1 Points)

20 November 2021

is office and administrative expense part of COGS?

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17 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14803 Points)
Replied 20 November 2021

No , office and administrative expenses are not part of Cost of Goods Sold

Cost of Goods Sold = Opening Stock + Purchase -
(less) Closing Stock .

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CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 21 November 2021

No ...

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sabyasachi mukherjee (27579 Points)
Replied 21 November 2021

Yes certainly indirect overhead forms part of cost of goods sold.

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yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 22 November 2021

That is why AS MUST transit into IndAS.

five or six lines= you can calculate cogs.

Trading a/c is like time consuming and lots of waste paper and ink and background oks which is very expensive for a company. Cos method will reduce deforestation.

SMIFS LIMITED (37 Points)
Replied 26 November 2021

No Office and Administrative expenses are not part of COGS (Cost of Goods Sold). Instead I think they come under indirect expense.

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sabyasachi mukherjee (27579 Points)
Replied 26 November 2021

Indirect Overhead (expenses).

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yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 26 November 2021

Depends. Usually, in costing sometimes, cogs= cost of production + opening stock - closing stock.

In final accounts, it is after gross profit.

Indas method, it is after gross profit. So the discrimination lies of what it is between costing and final accounts. Everything is fixed and variable. Example factory overheads consists of indirect and direct wages. Here depreciation and this are included while final accounts separates them. So classification is important. Usually it is indirect expense

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 26 November 2021

Overall, the office expenses taken out of gross profit. And that is not included in cogs. Wait minute, other websites are also suggesting admin not included in cogs

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 26 November 2021

Fyi, Google production accounts. I forgot to mention this as I was stuck in a meeting with CEO's. I was advising them about future strategies. have a nice weekend

(Guest)

Office and Administration expense is a part of Cost of Goods Sold as per Cost Accounting Principles. This is evident from the format of Cost Sheet. But, Office and Administration Expense does not form a part of COGS as per Financial Accounting Principles. This is evident from the practise that we do not debit Office and Administrative Expenses in the Trading A/c.

It all depends on what kind of Accounting you are doing.

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(Guest)

The office and administrative expense which I am talking about is the one related to production. Such is to be taken as COGS in Cost Accounts. The general Administrative Expenses shall not form part of COGS.

Office and Administrative Expenses of both production and general are taken as Indirect Expenses in case of Financial Accounting. Please if anyone has any contradictory views do reply.

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 04 December 2021

i GOT IT! ITS NOT IMPORTANT "An enterprise may decide to expense an item which could otherwise have been included as property, plant and equipment, because the amount of the expenditure is not material." NO STANDARD SIGNIFICANTLY CLASSIFIES ALL EXPENSES.

prasad Nilugal ( GST Practitioner & Accounts ) (14803 Points)
Replied 05 December 2021

I am in a view' that legal expenses we incurred are not always under COGS , many times we incurred legal expenses and some other expenses are not directly related to COSG . therefore Indirect Expenses are not part of COGS .

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