Administrative expenses

Written by Fmi.Online Friday November 11, 2022
As the name implies, management costs are the normal costs you incur to run your business. Expenses that fall into the category of administration are those incurred by an organization that does not relate directly to a specific core function, such as manufacturing, production, or sales. 


The administrative expenses of the company consist of payroll expenses for senior executives and expenses associated with supplies or services, such as legal, accounting, and clerical work. Typically, these costs are not included in gross margins because they are indirect in relation to the production of goods or services by the organization.
There are some administrative expenses that are fixed in nature because they are incurred as part of the foundation of business operations. These expenses would continue to exist regardless of production levels or sales levels. Maintenance costs can also be described as semi-variable costs.
In the same year in which they occur, businesses can deduct from their administrative costs tax refunds that are reasonable, normal, and necessary for their business activities. These expenses must be incurred during normal business hours.

In a nutshell:

  • Costs incurred for business operations but not directly associated with producing products or services are called administrative expenses.
  • Accounting departments may allocate administrative expenses according to a percentage of revenue, expenses, or some other factor.
  • It is common for budget reductions to start with administrative expenses due to their intangibility.
  • A certain level of administrative expenses is inevitable as part of conducting business.
Our Courses are designed to boost your career

Launch your career with Fmi’s Learning Pathway

Choose a learning pathway that best meets your needs and ambitions. Not sure which Fmi learning pathway is right for you? Explore our CareerBuddy videos for help and advice.

Investment banking pathway
  • courses-clock60+ hours
  • courses-desktop9 courses

Investment banking offers many exciting career opportunities for students. From Financial Analysts to Investment Management, and Sales & Trading to a wide range of roles in infrastructure such as IT, Risk or Compliance. This pathway is designed to help you understand the investment banking industry, the roles investment banks are recruiting for, and most importantly, help you to develop the practical skills you need to get into the industry and your preferred role whether this be as part of a school leaver, intern or graduate program.

FMI Online Student join-student-img2 FMI Online Student
55,000+ students currently enrolled
Global markets pathway
  • courses-clock70+ hours
  • courses-desktop10 courses

Global markets provide a range of important products and services to corporates, institutions and governments worldwide from executing trades and managing risk to providing quality research content. A key business area in all investment banks, global markets offers a wide range of career paths for students to consider across all functions and at all levels from school leavers to internships through to graduate programs.

FMI Online Student join-student-img2 FMI Online Student
85,000+ students currently enrolled
Asset management pathway
  • courses-clock50+ hours
  • courses-desktop8 courses

The asset management industry is a global industry worth over 100 trillion US dollars. It plays a crucial role in managing the assets of retail and institutional investors, offering a wide range of exciting careers in doing so. If you’re looking to forge a career in asset management, our Asset management pathway is perfect for you. We help you build the skills all asset managers are looking for and explore everything you need to know about the industry and the wide range of roles available in the sector

FMI Online Student join-student-img2 FMI Online Student
100,000+ students currently enrolled