Question

What key questions does a Master Budget for Manufacturing Companies answer?

Answer 1

Key questions answered by Master Budget for manufacturing companies

• The Sales budget - Sales quantity and value each month wise
• The production budget - Quantity each month wise
• Inventory levels to be carried for finished goods and raw materials
• Key factors - capacity levels, labor hours, storage space, Supplier availability, Cash balance, etc
• Raw material purchase budget - Quantity and cost
• Direct Labor Budget- hours and cost
• Variable manufacturing  overhead budget
• Fixed manufacturing overhead budget
• Cash Collections from Customers and Cash payment to Vendors and Operations
• General and administration expense budget
• Selling and distribution expense budget
• Cash Budget- cash balance for each month and financing requirements, etc
• Fixed Assets - Purchase and depreciation
• Income Statement - Cost of Goods sold, Gross profit and Net profit
• Balance Sheet - Current Assets, Fixed Assets, Current Liabilities and Equity/Retained earnings