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Expenses driven by sales volume
include sales commissions
and many delivery expenses. Operating Expense Budget
Other expenses are not influenced by sales
or other cost-driver activity and are regarded
as fixed, within appropriate relevant ranges.
Rent Depreciation Insurance Salaries Operating Expense
Disbursements for operating expenses are
based on the operating expense budget. Operating Expense
For example, 50% of last month’s
and this month’s wages and
commissions plus miscellaneous
and rent expenses may be included.
The total of these disbursements is then
used in preparing the cash budget. Budgeted Income Statement
The income statement will be complete
after addition of the interest expense,
which is computed after the cash
budget has been prepared.
Budgeted income from operations
is often a benchmark for judging
management performance. Objective 4
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- Fall '11