What does the selling, general, and administrative budget include?

The selling, general, and administrative budget, often referred to as the SG&A budget, encompasses all planned activities and expenditures that fall outside of direct production costs. This budget includes expenses related to marketing, sales, office utilities, salaries for administrative staff, and other overhead costs necessary for running the business.

These expenses are crucial for supporting the production process and ensuring that the company can effectively sell its products or services. By focusing on activities beyond production, this budget area provides a comprehensive view of the costs associated with operating the business as a whole, ensuring that financial planning captures all aspects of the organization’s performance.

In contrast, the other options primarily deal with specific aspects of business finances that do not fully represent the broader scope of SG&A. For example, production-related activities and raw materials purchases are focused on manufacturing costs, and long-term capital investments are more aligned with strategic financial planning rather than the operational costs captured in the SG&A budget.