Administration expenses

Administration expenses are the costs of paying wages and salaries and providing benefits to non-sales personnel. They are one of three kinds of expense that make up a company’s operating expenses. The others are selling and general expenses.

Administration expenses are categorized as indirect expenses on a company’s income statement because they do not contribute directly to the making of a product or delivery of a service. As they tend to remain stable even when production volumes change, administration expenses are described as fixed costs (as opposed to variable costs or semi-variable).

More about administration expenses

The excerpt below shows where administration expenses appear on a company’s income statement and how they are used to calculate total costs and earnings before interest and taxes.