Management expenses are the funds necessary to manage the organization, which form part of the current expenses of the enterprise and affect the formation of production costs.
In accounting, management expenses are reflected in the debit account of general expenses. They can also be considered as recurring expenses that are not related to the production process, but are necessary to maintain the property and financial complex of the enterprise in the reporting period. In this case, they are referred to as operating expenses, or as a loss to the company.
Management expenses include salaries and bonuses of management personnel, travel expenses, postal, office needs, transportation, maintenance of administrative buildings, depreciation expenses, office maintenance (rent, utilities, communications), services of third-party organizations (insurance, legal, audit) etc. Salaries are determined according to the staffing table, office and postal expenses amount to 2-3% of the salary of management personnel. The costs of maintaining buildings are calculated similarly to workshop expenses (electricity, water, heating). 3% is allocated for current repairs , equipment - 7% of their cost on the balance sheet. Depreciation is equal to 6.5% for plants and 6.1% for workshops of the cost of fixed assets for administrative purposes.
The budget for the costs of managing the enterprise is accurately calculated to ensure its normal functioning. Management expenses are planned in several ways. The first (traditional) - provides for the limitation of this type of expenses as a percentage of the salary fund of the main staff. The second (“from the achieved”) is based on the annual indexation of the level of expenses according to their growth rate over the period. It is also possible to plan in conjunction with the final result of the activity. This method is the most effective, but in contrast to Western countries, it is practically not used in Russia.
In many firms, planning management costs stretches for several months. Developing a reliable budget is a rather time-consuming and time-consuming exercise, because quite a lot of participants are involved in its coordination.
Management expenses are not directly related to the main (production, commercial) activities of the enterprise. However, in accounting they are reflected in the debit of expense accounts for general expenses. If the accounting policy of the enterprise allows to include such expenses only partially in the cost of its products, then it is allowed to write them off using certain postings.
Management expenses are planned in a separate budget, are not tied to production or sales volumes, and are calculated regardless of the dynamics of the enterprise’s income. Most of these costs relate to limited costs. They are divided into expenses associated with the assets of the business, and expenses associated with its development. The first group includes such items as depreciation charges, equipment maintenance costs, rental payments, etc. They are planned in conjunction with the cost and life of fixed assets. The second part (salaries of managers and other specialists, engineering and management personnel, their representation, travel, transportation and other expenses) are planned individually for each company.
Management expenses must be documented without fail. Such documents are payment orders, receipts, expenditure cash warrants. Without these documents, the organization does not have the right to take into account management expenses for tax purposes.