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.
General and Administrative Expense Budget FAQs
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.
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.
The general and administrative expense budget includes both fixed and variable costs. This budget focuses on Predicting non-selling expenses for the period.
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.
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.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
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