What is an Administrative Budget
An administrative budget is an official, detailed financial plan for an upcoming period for a business. An administrative budget is usually prepared on an annual or quarterly basis and identifies the costs of running an operation that is not tied to producing a product or service. Costs can include those associated with non-production and supervisory payroll, depreciation, amortization, consulting, sales, dues and fees, legal fees and marketing, rent and insurance. The budget enables management to exercise control of the day-to-day activities of the business.
BREAKING DOWN Administrative Budget
An administrative budget deals with the administrative side of running a business. Non-production payroll may include sales staff, accounting personnel, managers, clerical staff and other support staff members not involved in production. An administrative budget is a formal breakdown of all planned expenses, allowing managers to make estimations and measure progress.
To measure managerial effectiveness and financial performance administrative budgets are often analyzed for trends or patterns. A popular technique compares the plan (or budgeted) to actual business results. Here, a business analyst can identify what is working and what isn't. In theory, management can then allocate resources to their most effective uses.
No two administrative budgets are the same. Their content and composition will change with business conditions and the needs of parties reviewing them. Large organizations, such as the State Department will have administrative budgets that are far more sprawling than a monoline agency's, such as the Army Corps of Engineers.