Western Governors University (WGU) ACCT2020 D196 Principles of Financial and Managerial Accounting Practice Test

The selling and administrative expense budget details the anticipated selling expenses and administrative expenses for a business over a specific period. This budget is essential for planning and controlling costs related to marketing, sales personnel, office supplies, and administrative functions that do not directly tie to the production of goods or services.

By focusing specifically on selling and administrative costs, this budget helps management assess the overall financial health of the business and align resources effectively. It also allows for better decision-making regarding staffing, advertising, and other promotional expenses.

In contrast, other budgets mentioned, such as the direct materials budget, manufacturing overhead budget, and sales budget, serve different purposes and do not directly account for selling and administrative expenses. The direct materials budget specifically outlines the costs of raw materials needed for production, while the manufacturing overhead budget details costs associated with manufacturing processes that do not fall under direct labor or materials. The sales budget forecasts expected sales revenue but does not encompass the expenses related to selling and administration. Thus, the selling and administrative expense budget is the correct choice as it directly focuses on those specific expense categories.