Administrative Costs Example

The administrative costs They are the resources necessary for operations and management within a company, they are the expenses or costs that the company applies to carry out internal procedures and movements.

These costs are managed, reported and distributed by managers and administrators. Administrative costs are generated mainly by the salaries of managers, secretaries, administrators, accountants and other personnel, who do not directly influence the process of production. It is all those personnel who handle the internal procedures of the company, such as distribution, hiring, the dining room, etc.

The administrative costs are reported and carried out by each department and a list or report that is attached to the other costs so that the corresponding executives can account for them and approve.

Administrative costs example:

The company Guitarras Guti S.A de C.V is doing the year-end accounting.

For this, it is necessary to separate the different costs, and the costs that remain to be accounted for are the Administrative costs.

To do this, the hired accountant asks the manager to indicate the administrative costs incurred during the last three months of 2012.

The manager informs you that the payments corresponding to the salaries of:

• Manager
• The Secretary
• Counter
• An administrator
• Hiring an auditor
• The hiring of the company's lawyer
• Payments to pensions of the above-mentioned workers etc.

He gave her a detailed report of the movements made by the manager and his subordinates, as well as well as the functions of each administrative employee, so that the movements are defined made.

The accountant, attached the data recorded and attached to the rest of the costs that will be sent to the shareholders of the company.