You know that SG&A line on the income statement? Well, it stands for Sales, General, and Administrative, and this budget simply prognosticates what a company will spend in the next ninety-one-ish to three hundred sixty-five-ish days.
It answers such fetching questions as, "what will rent cost?" and "how much will our insurance be?" and "what will we spend on lawyers?" The admin budget does not include the people who actually make stuff for the company. It just covers the bureaucrats who do nothing productive, other than organize the work of the people who actually add direct value to the company itself.
At Shmoop, the administrative budget applies to bureaucrats managing contractors, and doesn't cover the cost of the writers, editors, and artists who actually make the fine Shmoop product you dearly love.
Related or Semi-related Video
Finance: What are operating profits, net...62 Views
finance a la shmoop.what are gross profits operating profits and net
profits? well the greatest fishing company that walks the earth or swims
the ocean made a fortune last year from selling nets. catching things like well [fish is caught from the ocean]
me. but that's really a different thing and no Bueno. leave us alone. in an
accounting sense net profits come after operating profits that come after gross
profits .and the net thing is well pretty much taxes. so here's an income statement
yeah yeah revenues and then there's the cost of the stuff you're selling. okay
fine. we'll note the nets only cost a little bit to make and you sell them for
a fortune .way overpriced if you ask me. like whatever happened to line fishing
anyway lazy humans. so you have your revenues then your cost of goods sold.
all right well if you subtract those cogs from the revs you get your gross [income statement pictured]
profits. yeah gross just gross and sad frankly like why not eat more chicken
seriously. anyway .so then you have your costs of operating the business you know
overhead. secretaries and insurance and rent and fish-smell deodorizer. and then
you have operating profits after you subtract. them yep you subtract those
right from gross profits. get operating. so you made some number let's call it 10
million bucks why not .you know how many of my brethren died to give you that
money right? blood money. talk to Leo to see about it.
maybe he'll make a movie . anyway let's say the tax rates 30% well you'd pay 3
million in taxes on that 10 million of operating profit to then have net
profits of seven million dollars. lots of profits .there people. yeah hope you can [equation]
sleep at night.
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