2.3 Selling, General And Administrative (SG&A) Expenses of PT. Krakatau Steel

In companies as general, selling, general and administrative – operating costs are the expenses for managing and operating a business including costs of rent and utility, expenditures for advertising and marketing, distribution costs (Beaver, 2021), a set of personal computer or laptop, and benefits for all employees. In nature, the expenses are considered fixed or semi variable because they are not fluctuating with the volumes of purchases and manufactures. The operating costs are also considered as indirect expenses on the income statement of a company because of indirect contribution to the service delivery or product manufacturing (BDC, n.d).

The following table mentioned operating expenses of PT. Krakatau Steel in the end of 2020 and June 30, 2021. Based on the table, in June 2021, Karim & Tardi  reported the specific types of SG&A costs or expenses that PT. Krakatau Steel incur including selling (expense of delivery, employee benefits, wages and salaries, expense of office, the claims from costumers, communication and transportation, amortization and depreciation and others), General and Administrative (benefits for employees, salaries and wages, amortization and depreciation, expense of office, maintenance and repairs, rental and insurance, fees of professional, provision for impairment receivables and others ). In comparison, the points of all selling expenses increase in some amount except for the customer complain expense which decrease from 634 to 259 thousand USD. This means the company well-pay for the customer’s satisfaction reducing the claims of customer, operational needs in office and employee’s wealth. In the general and administrative expenses, considerable increasing ones are for employee’s wealth, rental and insurance, relatively huge increasing one is the provision for impairment receivable, and the company decreases the expenses of depreciation and amortization, office expense, maintenance and repairs, professional fees and others.

Operating expenses of PT. Krakatau Steel (Karim & Tardi, 2021)

            Considering the product costing which is the steel (Hot rolled coil cold rolled coil wire rod) as the main product of the company, in the period of the expense occurrence, SG&A will be reported on the statement of income of every companies in this case PT. Krakatau Steel. Therefore, as opposed to becoming part of the cost of the steel product, the expenses of SG&A are considered to be periodic expenses. The expenses are not assigned to the sold steels or the ones archived in the Krakatau steel’s inventory (Averkamp, 2021). The expense In more detail, the Krakatau steel incorporated company periodically reported annual financial statements and in the above report, the data was given in the month of June 2021 compared to the previously periodic year of June 2020. The report mentioned the total selling expenses of the company at the concerned period increases by 32.2 % from 15.405 thousand USD to 20.369 thousand USD, and the total general and administrative expenses of the company at that time period also increases by 11.28 % from 58.909 thousand USD to 65.554 thousand USD. In conclusion, Krakatau steel Inc’s total operating   expenses or SG&A increase in one periodic years from June 2020 to June 2021. 

References

BDC. (n.d.). What are operating (SG&A) expenses? – definition. BDC.ca. Retrieved September 16, 2021, from https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/templates-business-guides/glossary/operating-sg-and-a-expenses.

Beaver, S. (2021). The costs behind selling, General & Administrative expenses. Oracle NetSuite. Retrieved September 16, 2021, from https://www.netsuite.com/portal/resource/articles/accounting/selling-general-administrative-sga.shtml.

Karim, S., & Tardi. (2021). Financial Reports / Statements of PT. Krakatau Steel. www.krakatausteel.com. Retrieved September 16, 2021, from https://www.krakatausteel.com/public/pdf/Financial%20Report%20KRAS%20June%202021.pdf.

Averkamp, H. (2021). What is SG&A?: Accountingcoach. AccountingCoach.com. Retrieved September 16, 2021, from https://www.accountingcoach.com/blog/what-is-sga.