ABSTRACT
This chapter presents several methods for expense forecasting. Once profitability goals have been established and the revenue forecasts determined, the final component of the income statement, expenses, should be forecast. Expenses are the costs of being in business and providing a product or service to a customer. Selling expenses represent costs related to selling the product or service. General and administrative expenses include the entrepreneur’s salary, office personnel salaries and benefits, office supplies, insurance, accounting and legal fees, depreciation on office equipment, and any other costs incurred in running a business. The accurate forecasting of expenses is critical to the establishment of reliable budgets and as input for various business decisions that must be made during the start-up and growth of a business venture. The cost of goods sold and the selling expenses are considered direct costs, and of these, only the cost of goods sold and sales commissions are variable.
