Preparing an Operating Budget—Cost of Goods Sold, SG&A, and Operating Income

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Estimating SG&A

Selling, general, and administrative costs can include costs generated by research and development, product design, marketing, distribution, customer service, commissions, administration, and overhead. In the example below, only marketing and administrative expenses make up the SG&A budget.

SG&A: Year 2 Budget



Year 1

Year 2 Budget

Rate of Change

Sales, general, and administrative costs:

Sales salaries




Advertising expenses




Miscellaneous selling expenses




Office expenses




Total SG&A




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