From the course: Accounting Foundations: Budgeting

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The SG&A budget

The SG&A budget

From the course: Accounting Foundations: Budgeting

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The SG&A budget

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- The Selling and Administrative Expense Budget includes planned expenditures for all areas other than production. The cost of supplies used by the office staff, the salaries of the Sales Manager and the company President and the depreciation of the administrative office building, not the production facility, all belong in this category. Remember that when we were talking about the Master Budget, I said that once the sales forecast or Sales Budget is created, the budgeting team in a manufacturing company splits into two sub-teams. One of the sub-teams will use the sales forecast to determine the detailed plan for production, the Production Budget. This team will consider the amount and timing of purchases of raw materials, the hiring need for production laborers and the budget for the infrastructure or overhead cost. This collection of production budgets provides a numerical plan for what will happen inside the factory or the production facility. The other sub-team at the same time…

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