Mater Budget

Master Budget

John P. Jared

BUS 630

Dr. Scott Shaw, B.A., M.B.A., PhD.

December 7, 2009

A budget is a quantitative plan for acquiring and using resources over a specified time period (Noreen 2008, p. 298). A budget also identifies the resources needed to fulfill the organization’s goals and objectives. Organizations also prepare a master budget to better equip the organization for future growth. A master budget is a summary of a company’s plans to include specific targets for sales, production, and financing activities (p. 298). No company, regardless of size, should operate without a budget. Fleming (1995) says that budgets provide a disciplined approach to managing because they force managers to plan ahead and coordinate their activities with those of other managers, and with the firm’s goals and objectives. In addition, budgets pinpoint potential weaknesses and bottlenecks before they occur, forcing managers to address problem areas. Budgets also help in directing capital (p. 37). Successful organizations will have a well planned master budget with measured goals, cooperation and input from employees, and integrate those goals to evaluate performance.

Budgeting is essentially a process of planning and control. Planning alone does not bring realization of the plans of the organization but also control over operations is essential in order that the organization’s plans may be corrected and the organization keeps the course which has been laid out by the planning. The process of budgeting requires recognition of the important factors which will affect the business during the budget period and evaluation of the effect that these factors will probably have on a company’s operations. Among the factors than organizations should consider are volume, prices, efficiency, and technological advances (.

A master budget has several components and different budgets to measure success.

1. A sales budget, including a schedule of expected cash...