Selling and administrative budget is non-manufacturing budget because in this we do not estimate the purchase or production. We can making it monthly, quarterly or year basis. We can make selling expenses budget and administrative expenses budget together or separately.
Main aim of selling and administrative budget is to reduce the cost of selling and administrative budget. It is important because we can use it for performance measurement. All employees have warned to spend under budget. If there are more expenses than budgeted, then, we see the reasons behind this.
Selling and administrative budget is made for estimating the expenses relating to sales and administration. There are lots of expenses which we paid for promotion of sales and other administration. For example,
I am a small businessman, I have also two full time employees. I advertise every month. So, for better use of my limited fund, I need to make my selling and administrative budget.
1st Step : Make the List of Your Selling and Administrative Expenses
First of all make the list of your all selling and administrative expenses on the blank paper. No. of expenses will increase or decrease on the basis of size of organisation. For example, salesman salaries, advertising, office staff's salary, office and sales department's lighting expenses and office stationary expenses are common expenses
2nd Step : Estimate the Cost of the Each Selling and Administrative Expenses
Following are main factors which affects selling and administrative expenses estimation
1. It depends on the money which you will invest in these type expenses. For example, if you have big business, you can fix big budget on advertising and other selling and administrative expenses.
2. If selling expenses are variable, it will depend on the estimated sales value. For example, commission to salesman will depends on the amount of sales. So, first you will estimate the sale, then, commission will be estimated.
Remember : Selling and Administrative Budget is also called Selling and Administrative Expenses Budget. It is not sale budget. In sale budget, we estimate the amount of sale.
Importance of Making Selling and Administrative Budget
Main aim of selling and administrative budget is to reduce the cost of selling and administrative budget. It is important because we can use it for performance measurement. All employees have warned to spend under budget. If there are more expenses than budgeted, then, we see the reasons behind this.
Meaning of Selling and Administrative Budget
Selling and administrative budget is made for estimating the expenses relating to sales and administration. There are lots of expenses which we paid for promotion of sales and other administration. For example,
I am a small businessman, I have also two full time employees. I advertise every month. So, for better use of my limited fund, I need to make my selling and administrative budget.
Steps of Making Selling and Administrative Budget
1st Step : Make the List of Your Selling and Administrative Expenses
First of all make the list of your all selling and administrative expenses on the blank paper. No. of expenses will increase or decrease on the basis of size of organisation. For example, salesman salaries, advertising, office staff's salary, office and sales department's lighting expenses and office stationary expenses are common expenses
2nd Step : Estimate the Cost of the Each Selling and Administrative Expenses
Following are main factors which affects selling and administrative expenses estimation
1. It depends on the money which you will invest in these type expenses. For example, if you have big business, you can fix big budget on advertising and other selling and administrative expenses.
2. If selling expenses are variable, it will depend on the estimated sales value. For example, commission to salesman will depends on the amount of sales. So, first you will estimate the sale, then, commission will be estimated.
Example
Remember : Selling and Administrative Budget is also called Selling and Administrative Expenses Budget. It is not sale budget. In sale budget, we estimate the amount of sale.
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