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The operating budget contains the expenditure and revenue generated from the daily business functions of the company. The operating budget concentrates on the operating expenditures, including cost of produce sold in the market or popularly known as cost of sold goods (COGS) and the revenue or income. COGS is the cost of direct labor and direct materials that are tied to production.
The operating budget also depicts the overhead and administration costs tied directly to manufacturing the goods and providing services. However, the operating budget will not contain capital expenditures and long-term loans.
- "How Budgeting Works for Companies". investopedia.com. Retrieved 2020-05-07.
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