engineering

SG&A

SG&A is a engineering topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand SG&A rather than just read about it. In short: SG&A (alternately SGA, SAG, G&A, SGNA or Operating expenses) is an initialism used in accounting to refer to Selling, General, and Administrative Expenses, which is a major non-production cost presented in an income statement. SGA expenses are cost of doing business, they refer to: Selling: The sum of all direct and indirect selling expenses, which includes salaries of labor (excluding those related to the productio…

Key takeaways

SG&A belongs to engineering; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect SG&A to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of SG&A from memory before moving on to harder problems.

Reference excerpt

SG&A (alternately SGA, SAG, G&A, SGNA or Operating expenses) is an initialism used in accounting to refer to Selling, General, and Administrative Expenses, which is a major non-production cost presented in an income statement. SGA expenses are cost of doing business, they refer to:

Selling: The sum of all direct and indirect selling expenses, which includes salaries of labor (excluding those related to the production itself which are cost of goods sold), advertising expenses, rent, and all expenses and taxes related to selling the product; General: General operating expenses and taxes that are directly related to the general operation of the company, but do not relate to the other two categories; Administration: Executive salaries and general support and all associated taxes related to the overall administration of the company. These expenses are sometimes referred to as overheads, and represent indirect or fixed costs. They are not directly associated with the production of goods.

In construction In the construction industry, G&A expenses are often referred to as soft costs. Soft costs include architectural, engineering, financing, and legal fees, as well as other pre- and post-construction expenses. These are costs incurred in addition to labor and material costs, including architectural or engineering fees incurred to repair loss or damage to the property. A soft cost to a contractor, such as his administrative costs, can be a hard cost to the property owner because what the contractor invoices the owner is the owner's direct cost. The soft costs endorsement provided in the Builders’ Risk section of the AAIS Inland Marine Guide lists 10 types of soft costs: advertising, design fees, professional fees, financing, lease administration, real estate taxes, general administration, lease expenses, permit fees, and insurance premiums. Soft costs may include unforeseen construction costs (lost screws, damaged equipment), physical labor (tasks taking longer than expected, losing a key team member), or time wasted on strategy implementation (taking too long to decide a course of action).

Worked examples

Example 1 — a first encounter with SG&A

Start with the simplest possible case. Write down what SG&A claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In engineering, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to SG&A before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about SG&A ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of SG&A

In research: SG&A appears in engineering research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses SG&A in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: SG&A is common in secondary-school and first-year university syllabi. It links to neighbouring topics Accounting terminology, Cost engineering, Expense, so understanding it makes those chapters shorter.
In everyday life: Look for SG&A outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

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How to study SG&A in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what SG&A means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain SG&A out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is SG&A in simple terms?

Why does SG&A matter?

Because it connects several engineering ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study SG&A?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on SG&A.