XERO classifies expenses types as cost of goods sold (Direct
costs), Overhead and Expense.
MYOB classifies expenses types of Cost of sales and Expense.
Business may have different views on accounting for cost of
sales. Questions like whether to include
lease, energy, freight and warehousing can arise. Consistency or long-term usage
should be preferred.1
Overheads are the expenditure which cannot be conveniently traced
or identified with any particular revenue unit, unlike operating expenses such
as raw material and labour. Essentially, there are two business overheads,
administrative and manufacturing.2
These can be fixed, meaning they can be the same amount over
time or semi-variable, like power and telephone usage that can slightly vary
based on usage. They can also include marketing expenses.
Selling, General & Administrative (SG&A) is the term
that should be used for overheads in the Profit and Loss. These include all non-production expenses in any given
period.3
1. https://www.xero.com/nz/glossary/cost-of-sales/
2. https://en.wikipedia.org/wiki/Overhead_(business)
3. https://corporatefinanceinstitute.com/resources/accounting/what-is-sga/