Question

The accounting record for St. Louis Cardinals, baseball club in St. Louis, MO, reported the following selected information: Account Amount Cost of Tickets Sold 97,000 Depreciation Expense 36,000 Furniture and Equipment 72,000 Income Tax Expense 13,800 Insurance Expense 29,000 Interest Expense 15,900 Investment Expense 4,600 Marketing Expense 62,000 Prepaid Expense 16,800 Salaries Expense 78,000 Supplies Expense 35,000 Utilities Expense 41,000 Determine St. Louis Cardinal's selling, general and administrative expenses. (a.k.a. Operating Expenses.)

Answer 1

ANS:

Selling, general and administrative expense (SG&A) is reported on the income statement as the sum of all direct and indirect selling expenses and all general and administrative expenses (G&A) of a company. SG&A, also known as SGA, includes all the costs not directly tied to making a product or performing a service. That is, SG&A includes the costs to sell and deliver products and services and the costs to manage the company.

Typically, the operating expenses and SG&A of a company represent the same costs – those independent of and not included in cost of goods sold. Operating expenses include costs that are incurred even when no sales are generated, such as advertising costs, rent, interest payments on debt, and administrative salaries.

Calculation of SG&A expenses:

Depreciation Expenses 36,000

Insurance Expenses 29,000

Marketing Expenses 62,000

Salary Expenses 78,000

Supplies Expenses 35,000

Utilities Expenses 41,000

Total SG&A/ Operating Expenses

2,81,000