Selling Expenses Budget FAQs
The selling expense budget is the responsibility of the sales department. The budget includes selling expenses such as sales salaries, sales commissions, advertising, sales office rent, shipping expenses, sale supplies, and others. Selling expenses may be both fixed and variable.
Expenses are mostly comprised of Operating Expenses, like rent, utilities, advertising and payroll. Direct costs are another type of spending: what you spend on the goods and services you sell.
The selling and administrative expense budget lists all Operating Expenses incurred in selling and managing the business. The Operating Expenses are figured using the cost-volume (Flexible Budget) formula: y = a + bx, where a is the fixed monthly cost, x is the volume of sales, and b is a coefficient.
Cost of goods sold typically is listed as a separate line item on an income statement, while Operating Expenses represent additional costs that have not been included in cost of goods sold.
Most sales commissions are treated as selling expenses and should be reported on the income statement as part of Operating Expenses. They usually appear under the selling, general, and administrative expenses category (SG&A).
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.