CPIM Practice Exam

What encompasses the costs captured in general and administrative expenses?

1. Direct costs related to product manufacturing

2. Administrative salaries, office supplies, and computer systems

3. Marketing and sales commissions

4. Billing and collection expenses

The correct answer is: Administrative salaries, office supplies, and computer systems

The choice that accurately captures the costs included in general and administrative expenses is associated with administrative salaries, office supplies, and computer systems. General and administrative expenses, often referred to as G&A expenses, typically encompass the costs necessary to manage and support the overall operations of a company that are not directly tied to specific products or services. Administrative salaries reflect the compensation of personnel who are not directly involved in the manufacturing or selling process but are crucial for the overall management, planning, and support of the business. Office supplies are essential for daily operational activities and are considered a necessary cost for running the administrative functions of a company. Furthermore, computer systems facilitate the various administrative processes, enhancing productivity and coordination within the organization. In contrast, direct manufacturing costs are tied strictly to the production of goods, while marketing and sales commissions are expenses related to the promotion and sale of products. Billing and collection expenses also fall under operational costs but do not pertain specifically to administrative functions. Thus, the correct choice effectively encompasses a broader range of necessary support costs within the administrative framework of the organization.