General and administrative expenses are classified as fixed and variable costs. Therefore, the general and administrative budget is useful as a means of controlling these costs. Most of the elements in this budget are fixed costs.

Frequently Asked Questions

How to create a general and administrative expense budget?

The following elements go into a general and administrative expense budget: rent, utilities, insurance, legal fees, depreciation on office equipment, supplies, maintenance, travel expenses, miscellaneous expenses for which you have no product or service code assigned.

What is the difference between an administrative expense budget versus an operating expense budget?

An administrative expense budget would include all costs associated with running a business, where as an operating expense budget only includes the expenses related to making a sale.

What does the general and administrative expense budget include?

The general and administrative expense budget includes both fixed and variable costs. This budget focuses on Predicting non-selling expenses for the period.

What is the benefit of preparing a general and administrative expense budget?

The main benefit of preparing a general and administrative expense budget is that it allows management to predict non-selling expenses for the period. This information can help the office manager stay within budget and meet profit goals.

What other budgets does the general and administrative expense budget affect?

The general and administrative expense budget is usually made before the capital expenditure and cash budgets. This can cause some problems if expenses are underestimated. Management needs to have a good understanding of the company’s debt and cash flow before they can produce an accurate general and administrative expense budget.

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