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Handbook of Budgeting, 6th Edition by William R. Lalli

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CHAPTER TWENTY-THREE

Administrative-Expense Budget

R. Malcolm Schwartz

Maria Theresa Mateo, MBA

PricewaterhouseCoopers LLP

INTRODUCTION

The administrative-expense budget is an important link with all other budgets, because it comprises activities that support other budgeted activities and at the same time provides some elements of control, and of independent perspective, on those other activities. Therefore, how management views administrative expenses says much about how management governs and leads the overall organization. In this sense, it is important to deal with what administrative expense includes and why it is important, before even beginning to address how it is budgeted. As a consequence, this chapter concentrates on these subjects:

  • The role and scope of the administrative-expense budget
  • Methods used for preparing the administrative-expense budget
  • Factors that impact the administrative-expense budget
  • Unique issues impacting the administrative-expense budget
  • Tools and techniques for managing the administrative-expense budget

ROLE AND SCOPE OF THE ADMINISTRATIVE-EXPENSE BUDGET

The surge of reengineering and other efforts to improve performance and productivity have increased management focus on administrative expenses. Administrative expenses are somewhat straightforward, but the value of the activities for which administrative expenses are incurred—that is, why administrative expenses are consumed by administrative activities—is not as straightforward. Therefore, the ...

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