Question

What are some of the parts to the master budget. Do all organizations need all of the respective parts? Why or why not?

Answer 1

Master budget is defined as "the summary budgets incorporating the functional budgets which is finally approved, adopted and employed".

Parts of master budget includes all functional budgets

Ie sales budget, production budgets, production cost budgets, material budgets, purchase budgets, labour budgets, cash budgets etc

All organizations not need all the above mentioned budgets. Because there are many types of industry like manufacturing industry, service industry etc. The budgets needed for a manufacturing industry will not needed for service industry. That is like production budgets, material budgets etc are not needed for a service industry as they are not producing any products.

Service industry are needed sales budget and labour budgets etc

And there are some common budgets needed for a manufacturing industry and service industry. That are cash budgets sales budget etc.