Master Budget Flashcards
The firm has already defined its strategic goals and objectives for the next five years. As part of the planning process as a finance manager, it is your job to create the master budget for the firm. A master budget encompasses many components, gathered from all departments within a company.
Prepare a memo to be distributed to various department managers explaining what the major parts of the master budget include in order to educate employees on the importance of realistic figures. Be sure to identify the various supporting budgets you will need to compile the master budget.
What is the master budget?
-The budgeting process is a collaborative effort.
-Need realistic forecasts and estimates from each department.
-The master budget consists of the financial budget and the operating budget.
The firm has already defined its strategic goals and objectives for the next five years. As part of the planning process as a finance manager, it is your job to create the master budget for the firm. A master budget encompasses many components, gathered from all departments within a company.
Prepare a memo to be distributed to various department managers explaining what the major parts of the master budget include in order to educate employees on the importance of realistic figures. Be sure to identify the various supporting budgets you will need to compile the master budget.
What is the financial budget?
-Encompasses the cash budget, the budgeted balance sheet, and the budget for capital expenditures.
The firm has already defined its strategic goals and objectives for the next five years. As part of the planning process as a finance manager, it is your job to create the master budget for the firm. A master budget encompasses many components, gathered from all departments within a company.
Prepare a memo to be distributed to various department managers explaining what the major parts of the master budget include in order to educate employees on the importance of realistic figures. Be sure to identify the various supporting budgets you will need to compile the master budget.
What is the operating budget?
-The operating budgets are prepared first and show revenues and expenses, and the resulting budgeted income statement.
-Sales budget is prepared, based on the sales forecasts.
-Production schedule is prepared to meet these sales expectations.
-Schedule out the direct materials purchases budget, direct labor budget, overhead budget, and ending finished goods inventory budget.
-Prepare a cost of goods sold budget.
-A nonmanufacturing budget including selling, general, and administrative expenses.
