Master Budget

Presentation Prepared ByMohit Agarwal (266) Abhishek Gulati (246)

This budget summarizes functional budget to produce a budgeted profit and loss account and a budgeted balancesheet as at the end of the budget period as is cleared from the following« form. and when it is finally approved by the committee. The definition of this budget has been given by The Chartered Institute of Management Accountant.  . It is prepared by the budget committee on the basis of coordinated functional budgets and becomes the target for the company during the budget period.Master Budget ( Summarised budget or Finalised Profit Plan)    It is a consolidated summary of the various functional budgets. England.


         Sales Budget Production Budget Material Budgeting | Direct Material Budget Labour Budget Manufacturing Overhead Budget Cash Budget Selling and Administrative Expense Budget Budgeted Income Statement Budgeted Balance Sheet .Components and Preparation of Master Budget Following are the major components or parts of master budget.

The Master Budget Interrelationship .

Advantages-:   A summary of all functional budgets in capsule form is available in one report.    . The budget is very useful to the top management because it is usually interested in the summarised meaningful information provided by this budget. Information related to forecast balance sheet is available in master budget. The accuracy of all the functional budget is checked because the summarised information of all functional budgets should agree with the information given in the master budget. It gives an overall estimated profit position of the organization for the budget period.

Disadvantages-:       The time involved in producing such a budget. Incentives to lie and cheat in the budget process. Difficulties to obtain accurate sales forecast. Low level of participation in the budget process. Lack of acceptance of responsibility for the final budget. This is primarily the reason a smaller company may not make a master budget if the company has a very small managerial staff. .

Operating Budget for Sugar Cane Farm 19X4 .

The budget represents an overall objective for the farm for the whole year ahead which is expressed in financial terms. The master budget for sugar cane farm is shown. And once the master budget is prepared two further budgets can be prepared namely   Balance Sheet at the end of year Cash Flow budget which shows the amount of cash necessary to support the master budget. .

Thank you Taxmann ( Ravi M Kishore) Cost and Management Accounting (S.P. Jain & K. Narang .L.

Sign up to vote on this title
UsefulNot useful