Unit 6: Budgeting
In this unit we explore the components for preparing a master budget and its underlying performance schedules. Business managers create budgets to plan for future operations, create benchmarks to measure progress, and maintain necessary accounting controls. The budget process involves coordination among every department that is part of the company. Once the master budget is complete, the company can measure how actual performance compares with the budget.
Completing this unit should take you approximately 5 hours.
6.1: The Budget Process
6.2: The Master Budget
6.3: Budgeting in Nonmanufacturing Organizations
6.4: Ethical Issues in Creating Operating Budgets
Unit 6 Assessment
Unit 6 Conclusion
In this unit, you have learned to develop a master budget. It starts with recognizing the importance of the process and the involvement of all strata of the company. The master budget is composed of several schedules. All schedules interlock and are important. A critical schedule is the sales schedule as it drives all other schedules, and it involves possibly the greatest amount of uncertainty, as predicting sales into the future requires assumptions about many variables. A good master budget is essential to a well-run business. In Unit 7, you will learn how to make the master budget into a flexible living document that accommodates change as it happens and promotes good managerial decisions and control.