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Category: Tax
Satisfied Customers: 15831
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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We are in the process of moving our production in China from

Customer Question

Good morning. We are in the process of moving our production in China from one plant with whom we've been doing business for 20 years to a range of new factories that we've never worked with before. This has resulted in the hiring of two local Chinese employees and I'm looking for guidance on where to book the cost of the two employees, i.e., COGS or OPEX. One will perform QC on existing and new products exclusively. The other will do both QC and will also be responsible for identifying new factories and some light project management. I believe that most of the cost should be considered manufacturing overhead and be considered a cost of goods sold. Is this correct? Is there a case to be made for some of the cost to booked, e.g., new factory diligence, being booked to OPEX?Thank you
Submitted: 8 months ago.
Category: Tax
Expert:  Lane replied 8 months ago.

Hi. First OPEX is simply the global category for everything that's not CapEx. Some would say COGS (although above the line) is still OPEX, generally.


Regardless, COGS for the 100% QC person, certainly.


I would allocate the other, depending on time spent and label accordingly (new factory diligence seems very descriptive ... also good for contribution analysis later)