Selling Cost or Administrative Cost

Question

I have a question if company is engaged in project based business, for every project they receive an inquiry and develop a proposal. For each proposal they use consultancy involving technical and non technical aspects based on Direct and Indirect Labor hours, which later could be accepted, rejected or in waiting position.  What should I treat the cost of developing proposal?
Selling cost or Administrative Cost
(The issue is if the project is not sold or in waiting position then what should i consider this cost) as i have already paid to employess

Answer 1

I don't know that there is a set answer to this.  Regardless of the account you use, it is an overhead of doing business.  Most sources I've seen indicate that lost sales are not found in the accounting system -- they are oppportunity costs.  So I would suspect they should be treated as administrative costs until the time of the sale when they are transferred to another account to track the cost of the same.  That should enable you to also compare the cost of sales made vs. sales lost.  I recommend you consult your accounting professional for local regulations and best practices.