General and administrative contract expenses are assigned to which cost category?

• A. Capital Expenditures
• B. Indirect Costs
• C. Direct Costs
• D. S&A Expenses

Answer: (B)

General and administrative contract expenses are indirect costs. They can’t be tied to one specific contract in a way that lets you trace every dollar directly to that contract. Instead, they support the business as a whole and are allocated across contracts using an indirect-cost rate. This is different from capital expenditures, which are investments in long-term assets, and from direct costs, which can be traced directly to a particular contract (like direct labor or direct materials). While selling and administrative expenses exist as a broader category in financial statements, in contract cost accounting G&A costs are treated as indirect costs allocated to contracts rather than as direct costs.