Definition:

Other Selling, General & Administrative Expense (Other SG&A) refers to the indirect costs associated with selling products and managing the business that are not directly tied to production. These expenses include a wide range of costs such as marketing, advertising, salaries of non-production staff, office supplies, and utilities.

Examples

Examples of Other SG&A expenses include advertising costs, salaries of sales personnel, office rent, utilities, insurance, legal fees, and travel expenses.

Formula:

Other SG&A = Total SG&A Expenses - Direct Selling Expenses - General Administrative Expenses

How to use the metric:

This metric is used to analyze a company's operational efficiency and cost management. By examining Other SG&A, businesses can identify areas where they might reduce costs without affecting production. It also helps in benchmarking against industry standards to assess competitiveness.

Limitations:

One limitation of Other SG&A is that it can vary significantly across different industries, making cross-industry comparisons challenging. Additionally, it may not provide insights into the effectiveness of spending, such as the return on investment from marketing expenses.

Applies to:

This metric applies to most industries, particularly those with significant sales and administrative operations, such as retail, manufacturing, and service industries.

Doesn't apply to:

It may not be as relevant for industries with minimal sales and administrative functions, such as certain technology startups or research-focused organizations, where the primary expenses are related to research and development.

Summary:

Other SG&A expenses encompass a wide range of indirect costs associated with selling and managing a business. While useful for assessing operational efficiency and cost management, its applicability varies across industries, and it may not provide insights into the effectiveness of spending.