Administrative expenses include which of the following?

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Multiple Choice

Administrative expenses include which of the following?

Administrative expenses are the general costs of running the business that aren’t tied directly to making or selling products. They cover the overhead needed to operate the office and manage the company. Rent for the office fits this category because it supports administrative functions rather than production or sales activities. Advertising is a selling expense, aimed at promoting products to customers. Commission expense is also tied to sales performance, so it’s a selling cost. Freight out represents the cost of delivering goods to customers, another selling/distribution expense. If rent were for a factory or production area, it would be considered manufacturing overhead and part of cost of goods sold, not administrative. So, the office rent is the administrative expense.

Administrative expenses are the general costs of running the business that aren’t tied directly to making or selling products. They cover the overhead needed to operate the office and manage the company. Rent for the office fits this category because it supports administrative functions rather than production or sales activities.

Advertising is a selling expense, aimed at promoting products to customers. Commission expense is also tied to sales performance, so it’s a selling cost. Freight out represents the cost of delivering goods to customers, another selling/distribution expense. If rent were for a factory or production area, it would be considered manufacturing overhead and part of cost of goods sold, not administrative.

So, the office rent is the administrative expense.

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