Interest expense is not included in the selling and administrative budget because a company cannot estimate interest expense until it prepares the cash budget and makes borrowing projections.

Question

Quizplus · Accepted Answer

Interest expense is a financing cost and is dependent on the company's borrowing decisions. Therefore, it cannot be estimated until the cash budget is prepared and borrowing projections are made. It is included in the cash budget and the financial budget, but not in the selling and administrative budget.

Interest Expense Is Not Included in the Selling and Administrative