![]() The differential between gross profit and EBIT, assuming there are no other operating expenses, represents the incurred SG&A expense in the given period. For that reason, the first area that companies implementing cost-cutting initiatives tends to look at is their SG&A spending as opposed to COGS. ![]() Cost of Goods Sold (COGS): While SG&A primarily represents indirect costs unrelated to the core production of revenue, a company’s cost of goods sold (COGS) are directly related to revenue generation.SG&A Expense: SG&A is intended to capture the indirect costs included in a company’s core operating business yet are not directly connected to the manufacturing of the products or delivery of the services.The difference between the SG&A expense and cost of goods sold (COGS) line item is as follows. The SG&A expense is recorded on the income statement of companies in the section below the gross profit line item. SG&A stands for “selling, general & administrative”, and is a catch-all category of expenses that is inclusive of spending that isn’t a direct cost, otherwise known as cost of goods sold (COGS). Unlike a company’s cost of goods sold (COGS), SG&A represents the indirect costs of operating the business day-to-day, meaning that these operating costs are necessary to be incurred in order for its operations to continue running. SG&A, or “selling, general and administrative” describes the expenses incurred by a company not directly tied to generating revenue.
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