In the staff cost breakdown, where are the costs for support functions recorded?

• A. Administrative Expenses
• B. Cost of Sales
• C. Selling Expenses
• D. Financing Costs

Answer: (A)

Costs are typically classified by function on the income statement. The staff costs for support functions—like administration, HR, IT, and general management—do not directly tie to producing goods or delivering services. Instead, they support the organization as a whole, so they are recorded as Administrative Expenses (the general and administrative portion of SG&A). They aren’t part of Cost of Sales, which covers direct production costs; they aren’t Selling Expenses, which relate to marketing and sales activities; and they aren’t Financing Costs, which are interest and other financing charges.