What does the comprehensible master budget plan encompass? Please be detailed.
The comprehensible master budget plan encompassing all the individual budgets related to sales, cost of goods sold, operating expenses, capital expenditures, and cash. The master budget encompasses all functions and management levels, although the approach to formulating the budget may differ from company to company. Two opposite and extreme views of how to develop a master budget is the top management approach (input comes only from top officers), and the grass roots approach (all levels participate in forecasting). Irrespective of who is involved in providing input, the following sequence is generally followed in constructing a master budget.
1. Sales budget
2. Production budget
3. Direct material purchase budget
4. Direct labor budget
5. Factory overhead budget
6. Ending inventories budget
7. COGS budget
8. Selling expense budget
9. Administrative expense ...
What the comprehensible master budget plan encompasses is discussed.