Master Budget Course - Master Index Introduction 1.The Master Budget 1.Overview of the master budget 2.

Sales budget 2.Budgeting for the Cost of Production 1.Introduction 2.Production Budget 3.Raw Materials Budget 4.Direct Labour Budget 5.Factory Overhead 6.A summary 3.Budgeting for the Cost of Inventory 1.Application of Costs to Inventory 4.Budgeting for Expenses 1.Expenses budgets 2.Selling Expenses budget 3.Administrative Expenses budget 5.Putting it Together 1.Capital expenditure budget 2.Budgeted Income Statement 3.Budgeted Balance Sheet 4.Budgeted cash flow 6.The Master Budget - A Simplified Example - The Personal Software Factory Pty Ltd 1.Introduction 2.Budget overview and financials for the 19x1 year 3.Sales budget 4.Production budget 5.Expenses budget 6.Budgeted cash flow 7.Budgeted Income Statement 8.Budgeted Balance Sheet 7.Flexing the budget 1.Introduction 2.What if at the Software Factory 1.Base Case 2.Very Best Case 3.Worst Case 4.Analysis of the What If Scenarios 8.Using a Spreadsheet to Build the Budget 1.Introduction 2.Logical Formulae

The Master Budget Overview of the master budget The Master Budget for a profit oriented organisation seeks to build a set of interrelated budgets which provide a complete "picture" of the operations of the business over some future period, usually twelve months. The elements of the master budget addresses both operating and financial concerns. The major elements of the Master Budget are:

The Operating Budget is made up of the Sales Budget, Production Budget and Expenses Budget. As the name suggests the sales budget forecasts the sales for the company over the budgeted horizon. As we will explore shortly, the sales budget will for many business be a budget by product or

product line and by territory, again depending on the nature of the business. The Production budget for a manufacturing firm will seek to budget the costs of producing the finished goods including the cost of raw materials and direct labour that go into the manufacturing process as well as overheads in the manufacturing process such as the cost of buildings, light, heat power and supervisory staff within the factory. The expenses budget are for the various sales and administrative costs of doing business. The Financial Budget is made up of the Cash Flow and Capital Expenditure Budgets and the Budgeted Balance Sheet. The Capital Expenditure budget seeks to budget for purchases of capital items that is necessary for the operations of the business over the coming years. The budgeted Balance Sheets shows the funding impact of factors such as the level of Accounts Receivable flowing from the level of budgeted credit sales. The Cash Flow budget is the "glue" which binds the whole budget together. Every budget decision from the level of sales to labour costs and spending on capital items has some impact on cash flows. The cash flow budget seeks to show the cash funding necessary for the budget period. Let us now look at a plan of the Master Budget in more detail:

The production budget for manufacturing firms is made up of three elements: Raw Materials budget which establishes the cost of the material content of the production process Direct Labour budget which budgets for the cost of those staff directly involved in the production of manufactured products Overhead budget The expenses budget is made up of:  Selling expenses which includes distribution costs. sales and marketing expenses  Administrative expenses which includes the cost of overall corporate management and financing costs. .

While it can readily be seen that the cost of raw materials and direct labour are directly related to the level of sales.Sales budget The sales budget is the most important element in the master budget as all other budget assumptions flow from the sales forecasts in the budget. This will require capital expenditure. it might not be so obvious how other budget elements relate. The level of sales which are on credit will influence the Balance Sheet because it drives the level of Accounts Receivable The level of sales will drive selling and marketing expenses because extra sales means extra distribution costs and may relate to bonuses paid to the sales force The mix of sales can relate to the level of selling and marketing expenses. in turn. there may not be sufficient manufacturing capacity and the company will need to buy more capacity. the cost of debt finance for the business The sales budget will depend on the successful forecasting of a number of factors including:     The The The The state of the overall economy competitive position plans to introduce new products success of advertising and marketing campaigns The sales budget can be expressed in a number of different ways. If a company is introducing a new product there may be a high level of sales expenses as new advertising campaigns are ramped up The sales made by a company generates a positive cash flow and so the level of sales are important in determining the cash flow of the company and. Here are some relationships: The level of capital expenditure will depend on the level of sales. Some of the possible combination of factors in which the management of the company might be interested in reviewing the budget targets are: The factors in which management might be interested are: . If a company is showing rapid sales and therefore production growth.

Product: Here the management will wish to know sales revenue by product line. might be sales through sales channels such as local agents. This might be based upon a geographic territory within a country. The Sales Budget for a hypothetical company. the overall budget will typically be for a financial year. An example of a company which will wish to budget in this manner is a motor vehicle manufacturer which will budget not only for the general model but also variations within a model. There will be different revenues per unit for a top of the range model than for the entry level model within that range. It has an unusual spreadsheet the "4D Spreadsheet" which can build multidimensional spreadsheets with complex interlinking of spreadsheet elements. a breakdown by countries or regions and in some cases by class of customer. It has two products and two sales territories. the Software Factory for the first and fourth quarters for the year ended 31 December 19x1 is shown below. Budgets may differ from company to company. The company also has a multi-media database which allows users to store a variety of elements including moving images and photographs. The Software Factory is a manufacturer of software for the personal computer market. for a software company. by month or even in some companies. it will be possible to budget down to the individual product line and show budgeted product sales by product code in terms of units of production and revenue per item. by week. It is also very likely that there will be different gross margins for the different models within a range not only in terms of the Period: The periods into which the budget may be divided might be by quarter. As discussed above. it will often be necessary to analyse budgeted sales by sales territory. An example. . direct phone sales and licensing arrangements with major customers such as government departments or large companies. Sales territory: As well as breakdowns by product. For some companies.

4D Spreadsheet: The Northern Sales region sells primarily into the domestic or "SoHo" (Small office and Home) market through agents. The Northern Sales region is. shows budgeted sales by product and territory. as discussed above: sales through sales channels such as local agents. The unit price in each territory is an average of the three markets serviced by the territory.The sales budget. in building the sales budget. then. of which we can see just the first and fourth quarters. Let us look at some of the factors which went on. particularly affected by the preChristmas period as the home buyers of computers have their busiest . direct phone sales and licensing arrangements with major customers such as government departments or large companies. The Southern Sales region sells primarily in direct sales to large customers.

Whilst there is only one recommended retail price for all customers. For example. "cross-grade" where they are for the purposes of the "special" treated as existing users of the 4D Spreadsheet and only have to pay a normal upgrade cost. in the Northern Sales Region and has been showing signs of continuing growth in that region: growth which the Marketing director thinks will continue right through the year. The decline will come about by increasing discount levels going to corporate customers and "specials" where. It was launched first. So the company is. the cost of the labour used in the manufacturing . the sales in the Northern Sales region to the SoHo market is through agents and the average dollars per package is less than in the more direct sales to large customers by the Southern Sales Region. MegaMultiMedia Database: The MegaMultiMedia Database is a relatively new product for the Software Factory. whilst there has been no change forecast in the recommended retail price of the spreadsheet. the amount received by the company varies depending on the method of distribution. Budgeting for the Cost of Production Introduction The elements of the production budget for a manufacturing firm is made up of a budget for the cost of the raw materials that goes directly into the manufactured product. forecasting a slow decline in the average price of spreadsheets sold. The Marketing Director is forecasting a similar but somewhat lower price reduction in the sales price of the database as is expected for the spreadsheet. Further. to use an industry-term.season whilst the Southern Sales region has reasonably regular sales throughout the year. Continuing strong sales growth is forecast in the Southern Region which will nearly double sales in the region. for both sales regions. with a 60% growth rate forecast in the Northern Region. for example. It has only just been launched in the Southern Sales region and the lower sales price forecasted in the month of January recognises that many opening specials will continue for January but then the price will be brought into line with the Northern Region as the opening specials are brought to an end. for a limited period potential customers who have a competing spreadsheet can. the company is forecasting that the average sales price will decline over the year as the spreadsheet comes under increasing competition from other spreadsheets.

many manufacturing processes are "on demand" and will not have any finished goods but the great majority of manufacturing organisations will maintain a level of finished goods inventory. This can be seen in the figure below: Production Budget The first thing we must do is to work out how many items of production that will be made in the budgeted period.process and the cost of the other inputs into the process such as heating. Of course. lighting. The production must satisfy those sales in the current period that cannot be supplied from current production and also provide a surplus to put into the finished goods inventory. supervision and depreciation. The level of production in a period will be determined by using the output from the sales budget and will incorporate some assumptions on the desired level of closing inventory: The production budget for the Software Factory for the first three months of the budget year is shown below: .

770 * 125% = 962. Closing inventory is. is shown as: Raw Materials Budget . The finished goods inventory.The technology and cost of producing the 4D Spreadsheet MegaMultiMedia database is very imilar. so the production budget for the Software Factory shows the production and cost combined for both products. we can calculate the level of production in the period. So the closing inventory at the end of January is 125% of the February sales rounded to the nearest 10 units. The level of finished goods inventory not only has implications for the number of units to be produced in the manufacturing process but also relates to the Balance Sheet as it will impact on the dollar valuation of finished goods. that is required at the end of each period should be sufficient to meet all of the next period's sales and still have one quarter of the month's sales left over. again for the month of January. Which. in units.5 units which when rounded to the nearest ten units becomes 960 units. So if we know the quantity of opening inventory at the commencement of the period and we can calculate what the quantity of closing inventory should be and we also know what the level of sales for the period are likely to be. then.

as we will see. keyboard and display screen. the casing.The first of the costs of conversion to take the elements of a manufactured product from its raw materials to the finished product is. the Software Factory does all printing in house and. Of course. the cost of the raw materials these require special processing they are contracted in from an outside printer  Diskettes  Printed boxes to include manuals and diskettes  Shrink wrap Similar factors as apply to the calculation of the quantity of units produced in the production budget will also apply for the raw materials.  Reply paid cards . The raw materials that go into producing the software manufactured by the Software Factory would include:  Paper for the printing of the manuals. not surprisingly. for some businesses it may not be appropriate to go right down to the level of physical quantities of raw materials and a calculation of raw materials usage and purchases and inventory balances would be calculated as follows: . The calculation of raw materials usage and purchases and inventory balances in physical quantities would be as follows: To calculate the dollar value of these elements it will be necessary to multiply the units of each type of raw material by the estimated cost of the raw materials. The raw materials which go into a product can be very complex. is planning to spend a considerable sum on the acquisition of highly advanced printing facilities. It will be necessary to be aware of at least the dollar value of raw materials on hand at the end of each period and for some businesses it may well be appropriate to know about the physical quantities of the raw materials that make up each item of manufactured product. Because it wishes to maintain quality control over the production of the manuals. The number of items that go into a typical computer can range up to several hundred separate items once we count in all of the components on the main system board.

Direct Labour Budget It is normal to see the direct labour budget as responding directly to production levels.500.50 and this is expected to be constant throughout the 19x1 financial year. The closing inventory for the month of February is $5.The Raw Materials budget for the first quarter of the 19x1 year for the Software Factory is shown below: The estimated cost of all of the various items of raw materials in the production process is $12. being primarily paper and diskettes. Because the raw materials are rather generic in nature. The direct labour budget for a particular item in the product range will usually be calculated as: . The budget assumption is that 50% of the requirements for the next month should be on hand at the end of each month. and therefore readily obtainable only a relatively small amount of raw materials inventory is required at the end of each period.250 or 50% of March's raw materials consumption of $10.

Some of the costs which are included in this category include:  Incidental materials costs including cleaning and some packaging costs  The "on costs" of direct Labor such as idle time. heating or cooling. Typical application methods are direct labour hours. heating or cooling. Let us look at the factory administration cost structure and the factory administration budget of the Software Factory . units of production or machine hours. power and maintenance  Quality assurance  Supervision and factory management  Depreciation of factory equipment These costs are of both a fixed and variable nature. power and maintenance Supervision and factory management Depreciation of factory equipment For many companies. employers' contribution to the employees' superannuation fund and payroll taxation Fixed • • • Factory rent or lease costs. the budget will calculate an appropriate overhead application rate and apply the overhead to the budgeted production using the application base. employers' contribution to the employees' superannuation fund and payroll taxation  Factory rent or lease costs. Some examples of fixed and variable costs are: Variable • • Incidental materials costs including cleaning and some packaging costs The "on costs" of direct Labor such as idle time.The direct labour budget for the first quarter Software Factory for the first quarter of the financial year is shown below: Factory Overhead A variety of overhead costs associated with running the manufacturing process is included in the Factory Overhead budget.

600 in March. This has been caused by the purchase of additional manufacturing plant in the month as will be explained.All of the factory overhead for the Software Factory is of a fixed nature. The only change that we can in the first quarter is for factory depreciation which moves from $13. below.200 in February to $13. A summary Budgeting for the Cost of Inventory Application of Costs to Inventory We now need to consider the calculation of the overall cost of production and the application of overhead costs to particular products. in the context of the Capital Expenditure budget. .

As we have discussed. this may be an iterative process as knowledge of the cost structure of a product may well impact on the sales price and in turn changes in selling prices may impact on sales volumes. in turn. Changes in sales volume will. This seasonal pattern to production is typical for many types of businesses and is illustrated in a hypothetical example : . The largely fixed costs of factory overhead are being spread over a much larger number of units. impact on the cost structure and the cycle repeats itself. What is driving this variation where January is one third more expensive than November? The answer is to be found in the fixed costs of factory overhead.200 units as the company ramps up production for the summer break.36 per unit in January to a low of $33.One of the key benefits of the budget process is to enable management to review the estimated costs of manufacturing products in the budget period.50 in November. You will notice that production in January totals 725 units whilst in November is 1. The total manufacturing cost for the first and fourth quarters of the Software Factory is: You will notice that the total cost of the product moves substantially from a high of $44.

000 units in the fourth quarter. To overcome this problem.94 per unit whereas the average is $1.000 units in Quarter 2 to 825.33 per unit.78 Per unit down to $0. some companies will budget for under-applied overhead in those budget periods when production is below the average and budget for over-applied overhead in those budget periods when production is above the average.In this case the quarterly manufacturing overhead costs are constant at $800. The cost per unit ranges from $1.000 per quarter but the production varies considerably from 450. The accountant for the Software Factory has taken a straightforward approach and allocated costs to the periods as they fall and then used a weighted average inventory valuation method to calculate the costs of inventory. The calculation of inventory balances for the first and fourth quarters of the budget period is: .

A new average is calculated which is then applied to the cost both of sales in the period as well as the cost of the finished goods. Some of these costs are:  Variable .You will notice that the quantity and costs of the opening inventory is summed to the quantity and costs of the production for the month and a total calculated. Budgeting for the Expenses Expenses budget The cost of the two expenses categories of selling and marketing and administration costs flow from the Selling Expenses budget The selling expenses budget will normally be made up of a variety of costs that are fixed and variable and what might be called "discretionary".

2. the more a company sells the greater will be the cost of meeting warranty claims on items sold. Sales commissions Distribution costs Some travel costs Warranty costs Sales discounts Fixed 1. Some travel costs 3. 5. Salaries 2. Advertising campaign costs So we can see that there is a direct link between the level of sales in dollar terms and the budgeted sales commissions to the sales force and the physical level of sales and distribution costs. Marketing costs 2. light. These types of relationships are demonstrated below: The selling expenses budget for the first and fourth quarters for the Software Factory is: . Similarly. 3. 4. Rates.1. heat and power etc "Discretionary" 1.

The distribution costs are $3 per unit of sales. You will remember that elements of the company's product line relates to the SoHo market and is. The marketing program is moulded to fit this cycle.000 in October and November and peak in December at $85. Some of these relationships are:. some are influenced by the level of sales activity. Some of the expenses that would be encompassed in the administrative expenses budget include:     Wages and salaries of general management Bad and doubtful debts Insurance Interest While many of the expenses in the administrative expenses are of a fixed nature. This an example of what might be termed "discretionary" expenses. Note that the distribution costs of finished goods are for the company more closely related to the physical units rather than the dollar value of the sales.You will notice that the sales commission to the sales staff of the Software Factory is three percent of the sales revenue of the company. dependent on sales at the Christmas break.000. Administrative Expenses budget The administrative expenses budget encompasses a range of expenses that relate to the general management of the company and to the financing of the company.000 Per month but the company has planned a major campaign for the end of the year and marketing programmes go up to $75. therefore. Marketing programs are typically $20. The depreciation expense and marketing overhead are examples of fixed overhead. .

The administration budget for the Software Factory is: The interest on debentures is forecasted at 12% of the outstanding level of debentures. This figure is drawn from the budgeted Balance Sheet. Putting it Together Capital expenditure budget A capital item is usually defined as one which will last longer than twelve months and exceeds a certain amount The capital expenditure budget will be highly dependent on the level of sales forecast in the sales budget: .

the only capital expenditure that is forecast is in the first and fourth quarters and three items of plant are required: A fully automated four colour printing press for the in-house production of manuals. for example. as it happens. and floppies assemble and shrink wrap them in the display boxes. the first and fourth quarters of the Capital Expenditure budget is reproduced below: We can see that. Total spending of $200. by borrowing or be raised from the owners.000 will be required which will reduce the need for contract labour costs in the production process. in order to fund capital expenditure cash must be found from operating inflows. Some of the other relationships which the capital expenditure budget has with other budgets are: . the sales budget. Just as the capital expenditure budget is influenced by activity from. the capital expenditure budget influences other budget elements. Most importantly. a 150 per hour and floppy duplicator and finally a package assembly line which will take a stock of manuals.If we come back to our example of the Software Factory Pty Ltd. The level of capital expenditure will be one of the most important items in the cash flow budget.

800 in the month of December This reflects the budget assumption that additional depreciation is flowing from the acquisition of the various items of capital expenditure. The format of the Income Statement will vary from company to company depending on how much information .200 in the month of January to $15. Budgeted Income Statement The Sales Budget and the various expense budgets are brought together in a budgeted Income Statement.Let us return for a moment to the factory administration budget of the Software Factory where we see that the budgeted depreciation expense has gone from $13.

A direct relationship comes from the sales budget which will determine the level of Accounts Receivable arising from Credit Sales as shown below: . Budgeted Balance Sheet The budgeted balance sheet is impacted by a number of assumptions from all the other budgets. In the case of the Software Factory most of the information is contained in the schedules so the Income Statement is of a summary nature only: In this budget. This is due to the very high level of marketing expenditure required in this business sector and the customer support and research and development which is contained in the administrative expenses budget. Due to the nature of the business. the gross profit for the Software Factory is very high as most of the cost structure in the business is in the selling and administrative expenses. the taxation expense is calculated as is the subtotals within the income statement and the closing balance of retained relegated to schedules.

This in turn has an impact on the Cash Flow Budget as the level of Raw Materials must be funded. .Similarly the level of the Raw Materials shown as part of Current Assets on the Balance Sheet has come directly from the Raw Materials budget in the Production Budget.

as we will explore in more detail in a moment. .The Balance Sheet has as might be expected a number of relationships with other budgets.  Provision for Taxation is drawn from both the Income Statement for the expenses and from the cash flow statement where the payment to the taxation office is recorded.  Accounts Receivable is based upon an assumption of the numbers of days outstanding of credit sales which is drawn from the Sales Budget. In this case the budget assumes that none of the sales made in any given month will have been collected in cash at the end of the month but all the cash will be received in the next month  Raw Materials and Finished Goods are drawn completely from the Production budget as we saw above. The Balance Sheet and some of the relationships the budgeted balances have with other budgets for the Software Factory: Some notes on the relationships are:  Cash at bank is a "balancing item" and shows the residual of the impact of all of the transactions for the period. It is drawn from the cash flow statement.

It is highly significant to the process of the budget as the level of financing may well be at the heart of the very survival of the company. As we will discuss shortly. of course. One of the more important relationships is the impact of capital expenditure on the cash flow. Capital expenditure. Factory Plant. can be very "lumpy" as companies enter into major investments which relate to multi-year projects but which must.  Term Loan balances are influenced by additional loans or repayments shown in the Cash Flow statement. by its very nature. Budgeted cash flow The budgeted cash flow can be seen as the glue which holds the budget process together.  Retained Earnings are drawn from the profit and loss statement. Sales Equipment and Administrative Equipment are driven by the Capital Expenditure budget. the impact of changes in budget assumptions can radically impact on the cash generation ability of the firm and on the financing of the business. respectively. .  Accumulated Depreciation on Sales Equipment and Administrative Equipment is driven by the budget for selling expenses and administrative expenses. be financed in the year of expenditure. The capital expenditure budget impacts on the Balance Sheet as new capital expenditures are capitalised beyond the current financial year as well as the cash flow statement which recognises the financing requirements of the expenditure. similarly.  Accumulated Depreciation on Factory Plant is driven by the expenses shown in the budget for factory overhead and.

all sales are assumed to be on credit and we should. which is calculated as: The closing balance of cash is the figure which is the "balancing item" and which is the final figure which binds all the various budgets together.This is just one example of the many interrelationships and other relationships are discussed in the context of the Software Factory. Conversely however. pay particular attention to the calculation of the cash received from customers. . Let's look first at Accounts Receivable and Accounts Payable. In the Software Factory Pty Ltd case all purchases and other expenses are assumed to be paid in cash and so there are no Accounts Payable. therefore. The budgeted cash flow for the final quarter and for the complete financial year for the Software Factory is: Let us look at some of the more important elements of the company's Cash Flow budget.

The Master Budget .A Simplified Example – The Personal Software Factory Pty Ltd Introduction In this section we can show the overall budget for the Software Factory for the year ended 31 December 19x1. . It commences with a summary of the budget position for each of the four quarters and then shows the first and fourth quarters of the detailed budgets.

Budget overview and financials for the 19x1 year Sales budget .


Production budget Expenses budget .

Budgeted cash flow .

Budgeted Income Statement Budgeted Balance Sheet .

the level of sales activity is clearly the most important driver of the overall results of the company. marketing. Some issues that may be important for a company are:  What will be the impact on profits and on financing of changes in the sales volume of products?  What will be the impact on profits and on financing of changes in the sales mix of products?  What will be the impact on profits and on financing of changes in the raw materials cost of products?  What will be the impact on profits and on financing of changes in the value of the local currency in foreign exchange markets?  What will be the impact on profits and on financing of changes in assumptions on the cost of labour?  What will be the impact on profits and on financing of changes in assumptions on the level of capital expenditure? The budget should flex to allow us to view the consequences of the What if at the Software Factory It would be very desirable for general.Flexing the budget Introduction As we discussed in the previous topic. It is important for the master budget to be built in such a way as to allow the analysis of the budget under all its various different assumptions. So we have presented three scenarios to management  The "base case" which is the generally agreed position for the company  The "absolute best case" which assumes a ten per cent increase in sales $ revenue over the base case and a five Per cent reduction in the amount the company has to pay for raw materials . production and financial management to be able to review a number of budget assumptions. a budget may go through several iterations. there are many assumptions that could be built into a budget model but we will focus on just two:  The level of sales activity  The level of the cost of raw materials Of these two. As we discussed above. Nonetheless changes in the cost of raw materials can make quite a difference to the standing of the company.

676 in cash at the end of the period. What follows is a summarised version of the income Statement. The company budgets to earn an after tax profit of $491. Balance Sheet and Cash Flow of the Software Factory. Very Best Case The "Very Best Case" shows a 10% improvement in the level of sales and 5% improvement in the cost of raw materials from the master budget. The "absolute worst case" which assumes a ten per cent reduction in sales $ revenue over the base case and a five Per cent increase in the amount the company has to pay for raw materials What difference does that make to the level of profitability and cash generation ability of the company? Base Case First. let's remind ourselves of what the "base case" looks like. of course.970 for the year and have $338. no change from the master budget in the level of sales and raw material costs. . There is.

Worst Case The "Very Best Case" shows a 10% reduction in the level of sales and 5% increase in the cost of raw materials from the master budget.585 for the year and have $930.412 in cash at the end of the period. . The company under the "Very Worst Case" scenario would expect to earn an after tax profit of $211.The company under the "Very Best Case" scenario would expect to earn an after tax profit of $799.077 for the year and have just $56.770 in cash at the end of the period.

770 We can see that moving from the Very Worst to the Very Best case gives rise to major changes in all major variables.1m $0.676 Best case +10 -5% $3.8m $647.048%!. . Sales would increase by 41% but Net Profit after Tax increases by 300% and Cash on Hand by 1.5m $338.412 Base Case $2.2m $56.7m $0.Analysis of the What If Scenarios We can also put a summary of the what if scenarios in a table and show each case against some key variables such as the Sales Revenue and Net Profit after Tax for the period and Cash on Hand Worst Case Change in Sales Volume Change in Raw Materials Prices Sales Revenue Net Profit after Tax Cash on Hand -10% +5% $2.2m $0.

we can build spreadsheets that contain key elements of information in smaller.Using a Spreadsheet to Build the Budget Introduction You will have noticed that the analyses in the previous section changed significant variables such as Sales Revenue and yet the Balance Sheet flexed and still balanced.0 and the workbook feature of Microsoft Excel. Microcomputer spreadsheets are very useful tools in the support of the preparation of Budgets. With the multi dimensional spreadsheets now available such as Lotus 1-2-3 Release 4. A suite of spreadsheets that might make up the overall package and some of the many ways in which they might be linked are shown below: . That was because the Budget model for the company was built in a spreadsheet which was designed to be fully integrated and support flexing. easy to audit and maintain spreadsheets. We use linking between the smaller spreadsheets to build an overall spreadsheet that is completely integrated and flexible.

Logical Formulae Some of the formulae that might be used include "IF" statements and formulae that choose some value based upon a predetermined value such as "CHOICE" and "VLOOKUP" and "HLOOKUP". .

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