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Overhead Budget

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					GUIDELINES

GENERAL

Definition: An overhead budget is a list of expenses the business must incur during a given span of time in order to operate, regardless of
how much revenue is made.



Objective: The purpose of preparing an overhead budget is to determine what expenses are needed and how fast the expenses are being
incurred. This helps the business properly plan its budget so that it can meet these future, static expenses. If cash shortages are revealed ,
financial plans must be altered to provide more cash until a proper cash flow balance is obtained. For example, customer discounts for
pre-payments, more loan proceeds and/or more owner cash contributions.



The Spreadsheet: This template allows the user to record all expenses that are incurred by the business, regardless of how much it makes
in revenue (e.g., rent, utility costs, Internet connections, etc.). These should be expenses related to income-producing activities. The
template allows the user to specify a length of time over which to make the calculations (i.e., the cost over the next year, divided into
quarters). The entries listed in the spreadsheet will not necessarily apply to every business, and the user should adapt the spreadsheet to
the particular business for which the projection is being made, with appropriate changes in the entries as required.



Procedure:
1. Populate all applicable cells in the overhead budget's "Current Year" column. Cells that require your input are highlighted in BLUE.


2. Populate all applicable cells For quarters 1, 2 and 3. Cells that require your input are highlighted in GREEN.


3. The worksheet will automatically calculate the 4th Quarter figures and provide you with appropriate totals and percentages, by period.




ANALYSIS

1. The cash position at the end of each quarter should be adequate to meet the expense requirements for the following quarter. If there is
not sufficient revenue to meet the expenses of the subsequent quarter, then additional revenue sources and/or the reduction of expenses
will have to be analyzed to meet projection needs.

2. The projection becomes more useful when the forecasted information can be compared with actual information as it develops. It is
important to follow through and complete the actual columns as the information becomes available. Utilize a burn rate forecast to assist in
setting new goals and planning operations for more profit.




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Overhead Budget                                    Budget                             Budget        Budget        Budget        Budget
                                                   Current Year                   1st Quarter   2nd Quarter   3rd Quarter   4th Quarter
                                                         100.00%                      20.00%        35.00%        30.00%        15.00%
Overhead Budget (Listed Alphabetically)
Insurance Expense                                               15,000                3,000         5,250         4,500         2,250
Interest Expense                                                 7,000                1,400         2,450         2,100         1,050
Legal & Professional Fees                                       40,000                8,000        14,000        12,000         6,000
Office Expenses                                                 37,000                7,400        12,950        11,100         5,550
Postage                                                          4,000                  800         1,400         1,200           600
Refuse & Carting                                                 2,000                  400           700           600           300
Rent                                                            65,000               13,000        22,750        19,500         9,750
Repairs & Maintenance                                            1,500                  300           525           450           225
Salaries & Wages                                                75,000               15,000        26,250        22,500        11,250
Telephone                                                        5,000                1,000         1,750         1,500           750
Utilities                                                        4,000                  800         1,400         1,200           600
Various Administrative Expenses                                  2,000                  400           700           600           300

Total Overhead Budget                                          257,500               51,500        90,125        77,250        38,625

Overhead Budget Percentage                                     100.00%               20.00%        35.00%        30.00%        15.00%




Instructions for use:
Change values in column B, rows 5 to 16.
Change values in row 3, columns D, F and H. Column J will automatically update.
All other computations will update automatically.
Values in row 20 should equal values in row 3.




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Description: An overhead budget is a list of operating expenses that a business must incur over a given period of time, regardless of actual revenue. This template spreadsheet will help business managers plan for fixed overhead costs. This will help management determine what expenses are needed and can help management plan for any budget shortfalls. This form comes with instructions on how to populate the spreadsheet as well as advice on how users can analyze and interpret the budget data produced by the spreadsheet.