Elements that Go Into Creating a Master Budget

A master budget is a plan created to manage a company’s manufacturing and sales activity to meet profit and cash flow goals. Creating a master budget requires careful coordination of several smaller budgets covering all parts of the organisation; that way, the master budget is realistic but not complacent.

The master budget contains the following elements:

• Sales budget

• Production budget

• Direct materials budget

• Direct labour budget

• Manufacturing overhead budget

• Selling and administrative budget

• Capital acquisitions budget

• Cash budget

• Budgeted financial statements