Expert answer:BUS 315 Cost and Price Analysis Week 8 Discussion

Answer & Explanation:”G & A Expense” Please respond to the following:Specify several advantages of operating a small business when it comes to General and Administrative (G&A) expenses. Determine the single most important advantage that you believe would benefit the small-business owner the most. Explain your answer.Compare and contrast the G&A expense from a large company and a smaller company. Determine which characteristics you believe are the most important for both large and small companies. Justify your response for each.bus315_w8_p2.pptx
bus315_w8_p2.pptx

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Cost and Price Analysis
BUS 315
Analysis of Indirect Costs
Topics
• To cover this objective, we will discuss the
following topics:
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General and administrative expense
The government view of G&A expense
The allowability of G&A expense
Allocation methods for G&A
Analysis of G&A expense
General and Administrative
Expense
• Indirect costs incurred at the top level of a larger
company
• Usually seen in a pricing proposal from a
company with several operating divisions
• Represent a layer of indirect costs in addition to
overhead
Government View of G&A
Expense
• Viewed as a cost of doing business
• Government is willing to pay a fair share of a
firm’s G&A expense
• Firm must allocate G&A expense by acceptable
methods
Allowability of G&A Expense
• Certain peculiarities
– more unallowable costs in the G&A expense pool than
in the subordinate overhead accounts
– certain G&A expenses are unreasonable
Allocation of G&A Expense
• Problems in the Allocation of G&A Expense
– Allocation of G&A is a very difficult area
– G&A expenses are different from other indirect costs.
They do not vary as much with changes in business
volume
• Allocation Methods for G&A Expense
– Total Cost Input
– Value Added
– Single Element Cost Input
Check Your Understanding
Summary
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General and administrative expense
The government view of G&A expense
The allowability of G&A expense
Allocation methods for G&A
Analysis of G&A expense
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