Master Budget Financial Plan For Coming Year

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Master Budget-financial plan for coming year(s) of where company strives to be financially.

Three parts: Organizations goals, strategic long range profit plan, tactical short range profit plan.

Organization’s goals-overall goals of organization that employees work to achieve. Those goals can be in the areas of financial, employee learning, innovation, and community involvement.

Strategic long range profit plan- Outline of steps needed to achieve organization’s goals. Year by year steps.

Tactical short range profit plan-planning around current operational areas of an organization. One year or less.

Budgeting- takes into account the goals, plans, decision and employee’s performance. Is long range plan encompassing events expected to happen in the upcoming year(s), with the understanding that things can and often do change.

Budget preparation decisions for the upcoming year(s) takes into account information gathered from managers in other departments (production, purchasing, and accounting, human resources). Organizations also gather information from competitors, customers and suppliers.

Developing the Master Budget

Since Revenue (Sales) drive the organizations budget, it is often the first step and most difficult due to unpredictability. To counter this the preparer gathers information from several sources.

Sales Force- have the knowledge and information about the organizations customers’ needs now an in the future needed to forecast sales revenue.

To check

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