selling expenses

[Former Member]

Hi,

I understand from the forum of this :

"for manufacturing, the cogs is determined by the cogm (direct materialsdirect labour production overehads) and in turn, cogs is COGM+All Indirect overheads."

1 May I know selling expenses, shipping & delivery charges, admin cost also part of COGS or it is not cogs but Operating expenses?

2 what would be the difference if they are part of COGS or part of operating expenses?

Thanks

Rgds

[Former Member · Accepted solution]

Hi,

You can treat it in this way. COGM + Operating expenses(selling & advt expenses, shipping & delivery charges,

admin, legal & professional expenses) = COGS. These are variable cost applied on COGM based on

which sales margin and profit on sales is decided for particular product.

Regards,

Sadashivan

[Former Member · Accepted solution]

hi,

thanks but i need to know the below 2 points. can have advice by point form?

1 May I know selling expenses, shipping & delivery charges, admin cost also part of COGS or it is not cogs but Operating expenses?

2 what would be the difference if they are part of COGS or part of operating expenses?

thanks alot

[Former Member · Accepted solution]

Hi,

1 May I know selling expenses, shipping & delivery charges, admin cost also part of COGS or it is not cogs but Operating expenses?

They form part of Operating Expenses.

2 what would be the difference if they are part of COGS or part of operating expenses?

COGS is the final cost or final result after adding the operating expenses with COGM.

They fall within the COGS in the subgroup Operating expenses.

Like direct wages and direct labour come under the group manufacturing expenses which

adds to the materials consumed to give the result as COGM.

Regards,

Sadashivan

[Former Member · Accepted solution]

hi,

thanks for reply.

i ask as because our selling expenses, delivery charges is actually after COGS. if that is so which means it is not part of COGS. can have advice on this?

thanks

[Former Member · Accepted solution]

Hi,

I have given the standard approach and it is your company formulation to capture those costs out of COGS.

My advise was based on a standard cost estimate. You can define the costing sheet to suit your company

requirements.

Best Regards,

Sadashivan