Administrative costs, also known as general and administrative (G&A) expenses, are the expenses a business incurs in order to run its day-to-day operations and support functions. These costs are not directly tied to the production of a product or service, but are still necessary for the overall functioning of the company. Examples of administrative costs include:

• Salaries and wages for administrative and support staff
• Rent for office space
• Utilities (electricity, gas, water, etc.)
• Insurance (liability, property, health, etc.)
• Office supplies and equipment
• Legal and accounting fees
• Marketing and advertising expenses

The formula for administrative costs, also known as administrative expenses, is as follows:

Total Administrative Costs = Salaries and wages + Rent + Utilities + Insurance + Supplies + Miscellaneous expenses

This formula includes all of the expenses that a business incurs in order to run its day-to-day operations and support functions, such as maintaining a physical office space, paying for insurance, and purchasing office supplies.

It’s important to note that administrative costs are different from operational costs which are costs incurred in the process of producing a product or providing a service.