Question

What do I need to know in order to create a driver base forecasting for general and administrative expenses?

Answer 1

Driver based forecasting is a tool of ABC Costing or Activity Based Costing system. General and administrative expenses is also known as the operating expenses includes manager's salary, Insurance or expenses for utilities etc. So, for a good driver based forecasting for general and administrative expenses you need to know the sub parts or the components of general expenses, then you need to knoe the drivers which influence those expenses. For example: A company is having 3 managers now and their salary is Rs. 50000 per month and in next year the company is going to recruit one more manager. So, Managerial salary is a part of General and Administrative expenses. You need to know each and every component of the general and administrative expenses and the respective cost drivers, only then you can make an effective Forecast.