Muster budget is a summary of a company’s plan that sets specific targets for sales, production, financial activities and that generally achieves in a cash budget, budgeted income statement and budgeted balance sheet. It is the aggregation of all lower-level budgets produced by a company’s various functional areas, and also includes budgeted financial statements, cash forecast, and a financing plan. It is normally presented in both a monthly or quarterly system, and generally covers a company’s whole fiscal year. It is the summary of the divisional budget. It is a continuous financial plan.
Contents of the master budget: The main components of a master budget include income and expenses, and production costs, and the monthly, annual, and average totals. The major contents are as follows –
- Sales budget,
- Production budget,
- Direct material budget,
- Direct labor budget,
- Factory overhead budget,
- Variable costs of the production budget,
- Operating expenses budget,
- Cash receipt budgets,
- Cash payment budget,
- Cash budget,
- The variable cost of goods of the sold budget,
- Budgeted income statement,
- Budgeted balance sheet.
