Expense Sales, Administration, Research

Sales, administration, research, and engineering expenses (SARE) Overhead expenses incurred as a result of maintaining sales offices and administrative offices and the expense of maintaining research and engineering departments. This item is usually expressed as a percentage of annual net sales. 

Cost of Goods Sold and Operating Expenses. This item includes all the expenses in converting raw materials into finished product, including depreciation, as well as sales, administration, research, and engineering expenses. 

Sales, Administration, Research and Engineering Expenses (SAKE). These are the expenses associated with the maintaining sales offices, paying the corporate officers and their staffs as well as research and engineering expenses not attributable to a specific project. 

Selling / Transfer Expenses 3.00% of Sales Direct Research 4.80% of Sales Allocated Research 0.50% of Sales Administrative Expense 2.00% of Sales Management Incentive Compensation 1.25% of Sales... 

These many influences cause wide variations in operating costs. The costs recorded here were taken in many instances from actual plant records for plants situated all over the country and from sources too numerous to list here. The costs for sales, advertising, research, general administration expense, depr,eciation, taxes, and profit are not included in the general operating costs, but the depreciation and taxes are included in the complete refinery operating costs (except when noted otherwise). 

General expense can be approximated as 15—20% of the total product cost. Typical category factors, as percentage of total product cost, are 3% for administration, 10% for sales, and 4% for research and development (R D) (1). 

Research expenses are those associated with the administration and running of research projects. Research expenses average 3-4% of sales for the chemical industry. For the large pharmaceutical companies this is nearly 10%.8... 

Gordon Douglas claims he doesn t know how much it cost to finally develop the chickenpox vaccine, or any other vaccine he worked on at Merck, because he never totaled them up by product. You pay for the marketing, research, administrations, and all other costs as the costs are incurred, and therefore they are expensed against current sales, he says. 

The benefits of consolidation can include superior capacity utilization, the sharing of best practice process improvements, the elimination of overlaps in the distribution system, and the use of geographically closer plants for sourcing. Research and development and sales and marketing expenses can also be cut back by eliminating duplications in operations. Some non-traditional players (e.g., financial investors) have been able to slash their sales, general and administration costs by as much as 40 percent on the back of consolidation moves. 

When left-clicking within the Other Variable Costs section, the General Expenses dialog box appears, which permits the specification of percentages of product sales charged for selling/transfer expenses, direct research, allocated research, administrative expenses, and management incentives compensation. The defaults shown are those in the cost sheet of Table 17.1 and discussed in Section 17.2. 

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