Page 50 - Budgeting for Managers

The Parts of a Budget
gories and account codes that they use to track budgets. If that’s
the case in your organization, you’ll need to understand how
they work so that you can use them whenever you spend
money, request information from accounting, or track actual vs.
estimated budgets. Table 2-5 illustrates expense codes. 33
Marketing Finance Mfg
00 01 02 03 00 01 02 03 00 01 02 03
Expense Exp. Total Tot
Category Code
Cost of Goods
Sold 200 $294
Plain paper 201 245 85 50 35 85 55 10 20 75 75
Toner 202 49 17 10 7 17 11 2 4 15 15
Services 300 $150
Manual folding 301 65 50 50 15 15 0
Envelope stuffing 302 85 35 35 0 15 50
Table 2-5. Expense codes and departmental account codes

Each line item is given an expense code that is part of a
series. The series number (200 and 300, in Table 2-5) shows
the totals for all the items in the series. Each line item is broken
out by department. Each department is allowed to have up to
99 sub-codes, 01 through 99. The total for each department is
shown under the 00 code. Each number in the spreadsheet can
be assigned a particular code. For example, the $35 spent by
sub-account 02 within marketing for plain paper would be des-
ignated 201-MKT-02, the $50 spent by manufacturing on enve-
lope stuffing services would be coded 302-MFG-01, and the
$17 spent by finance for toner would be 202-FIN-00.
The expense code numbers for each line item allow
accounting to track expenses for each line item on their com-
puters. The groupings for department allow accounting to bill
back costs for copy shop services to the various departments.
And the sub-accounts let each department manage and track
expenses any way the people want to. For example, in market-
ing they might want to separate costs for mailings from costs