Question

What is a master budget?

What is the purpose of a master budget?

What are the behavioural issues related to master budgets?

What key features can contribute towards positive behaviour with budgets?

Answer 1

1.The master budget is consolidated summary of the various functional budgets.it is also called summarised or finalised profit plan

THe definition of this budget given by the charterd institute of management accountant, england is as follows;

The summary budget incorporating its component functional budgets and which finally approved adopted and employed

2. purpose of a master budget are

        1.To implement the strategies to accomplish the preset goals.

        2. to set the goals for the future actions.

        3. To compare the actual results with the budgeted results periodically.

3. There are behavioral issues relating to master budgets they are

   1. dysfunctional behaviors of manager and budgetary slack.

   2. it describes the nature of budgeting and analyses the budgeting process in organisations.

      3. it prepared on the basis of co ordinated functional budgets

4. key features can contribute towards positive behaviour with budgets are

    1. Use effective proactive budgeting techniques

     2.Understand the Importance

    3. Frequent feedback on performance

     4. Realistic standards