Budgeting Basics and Beyond

6.10. Selling and Administrative Expense Budget

The selling and administrative expense budget lists the operating expenses involved in selling the products and in managing the business. Just as in the case of the factory overhead budget, this budget can be developed using the cost-volume (flexible budget) formula in the form of y = a + bx.

If the number of expense items is very large, separate budgets may be needed for the selling and administrative functions.

Schedule 7

Table 6.7. THE PUTNAM COMPANY Selling and Administrative Expense Budget For the Year Ended December 31, 20B

Quarter
	1	2	3	4	Year as a Whole
Expected sales in units	1,000	1,800	2,000	12,000	6,000
Variable selling and administrative expense per unit[]	×3	×3	×3	×3	×3
Budgeted variable expense	$3,000	$5,400	$6,000	$3,200	$18,000
Fixed selling and administrative expense[]
Advertising	20,000	20,000	20,000	20,000	80,000
Insurance		12,600			12,600
Office salaries	40,000	40,000	40,000	40,000	160,000
Taxes				7,400	7,400
Total budgeted selling and administrative expenses[]	$63,000	$78,000	$66,000	$71,000	$278,000
[]
[]
[]

^[] Assumed. It includes sales agents' commissions, shipping, and supplies.

^[] Scheduled to be paid.

^[] Paid for in the quarter incurred.