Telephone Expense - from Operating Expense Budget

Murray decided it would be a good idea to set up a separate telephone line for his business. He called his local telephone company and asked how much it would cost him each month to have a business line. The telephone company estimated $100.00 per month plus long distance calls. Due to the nature of his business, Murray didn't think he would make very many long distance calls. To be objective, however, he forecasted $100 per month for long distance charges. Therefore, his 200X Telephone Expense each month is forecasted at $200. As a result, Murray's 200X Forecasted Cash Flow Statement will show a Cash Outflow of $200 each month between July and December for Telephone Charges. In addition, his 200X Forecasted Income Statement will show a "Telephone Expense " totaling $1,200 ($200 per month x 6 months).

Murray decided not to increase his monthly forecasted Telephone Expense during 200Y. In other words, Murray's 200Y Telephone Expense will also be forecasted at $200 each month. As a result, his 200Y Forecasted Cash Flow Statement will show a Cash Outflow of $200 each month between January and December for telephone charges. In addition, his 200Y Forecasted Income Statement will show a "Telephone Expense " totaling $2,400 ($200 per month x 12 months).