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Selling and administrative expenses budget

Updated on November 21, 2013

Non-manufacturing expenses are often grouped into a single budget called a selling and administrative expense budget or non-manufacturing costs budget. The selling expense components of this budget include salaries and commissions for the sates department, travel and entertainment, advertising expenditures, shipping supplies, postage and stationery (related to sales), etc. Sales expenses are included in this category because they are not allowed to be allocated to production processes, but must be expensed in the period in which they are incurred. The administrative expense components of this budget, on the other hand, include management salaries, legal and professional services, utilities, insurance expense, non-sales related stationery, supplies, postage, etc.


Just as with overhead expenses, selling and administrative expenses can be categorized into fixed costs and variable costs In general, selling expenses are made up of both fixed and variable cost components, whereas the administrative expenses tend to include more fixed costs.


The costs in this budget usually satisfy long-term goals, such as customer service, so it is not easy to make cuts in these expense items. When using a contribution margin format for selling and administrative expenses, all variable selling and administrative costs as well as variable manufacturing costs are deducted from net sales to find the contribution margin. This allows the budget to be used for internal performance measurement and to help show where costs can be controlled.
For example: Robin Manufacturing Company’s selling and administrative expense budget (non-manufacturing costs) is shown in Figure below

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    • cheetah786 profile imageAUTHOR

      cheetah786 

      5 years ago

      prea thanks for the comment.. i will wait for your hubs on business.!

    • prea profile image

      prea 

      5 years ago from Philippines

      Thanks, it's really good I found your hubs. This is a good way to refresh my memories from college since I graduated from a business course :) And I can use these hubs at work too. Voted up and useful. Keep up the good work.. I hope I can find time to write again.

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