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Hà Quang Phong đang tìm kiếm từ khóa The basic difference between a master budget and a flexible budget is that a: được Update vào lúc : 2022-12-20 02:10:09 . Với phương châm chia sẻ Bí quyết Hướng dẫn trong nội dung bài viết một cách Chi Tiết 2022. Nếu sau khi đọc Post vẫn ko hiểu thì hoàn toàn có thể lại Comments ở cuối bài để Ad lý giải và hướng dẫn lại nha.The key difference between master budget and flexible budget is that master budget is a financial forecast that contains all budgeted revenues and costs for the upcoming accounting year whereas flexible budget is a budget that is adjusted by incorporating the changes in the number of units produced. Both these budgets are considered important milestones in the budgetary control process. They are equipped with a number of uses such as cost control and performance measurement.
Nội dung chính Show- What is a Master Budget?Operational BudgetFinancial BudgetWhat is a Flexible budget?What is the difference between Master Budget and Flexible Budget?Master Budget vs Flexible BudgetSummary – Master Budget vs Flexible BudgetWhat is the difference between a master and a flexible budget?What is the difference between master budget and functional budget?What is the primary difference between a budget and a flexed flexible budget?What is the difference between master budget and?
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What is a Master Budget?
Master budget is a financial forecast of all elements in the business for the financial year prepared by combining many functional budgets such as sales budget, purchases budget, etc. These different budgets are interconnected and collectively provide accounting estimates for the upcoming financial period. Individual budgets will be prepared by each department, and the net outcome will be reflected in the master budget.
The master budget has two main components: operational budget and financial budget.
Figure 1: Components of master budget
Operational Budget
Operational budgets prepare forecasts for routine aspects such as incomes and expenses. While budgeted annually, operating budgets are usually broken down into smaller reporting periods, such as weekly or monthly
Types of Operational Budgets- Sales budgetProduction budgetSelling and administrative budgetCost of goods manufactured budget
Financial Budget
Financial budget outlines how the company earns and spend funds the corporate level. This includes capital expenditure (funds assigned to acquire and maintain fixed assets) and revenue forecasts from the core business activity.
Types of Financial Budgets- Cash budgetBudgeted income statementBudgeted balance sheet
An explanatory text is usually provided which includes an explanation of the company’s strategic direction, the role the master budget will play in the achievement of company, objectives and the management actions intended on attaining the said objectives. Master budgets are usually presented in monthly or quarterly formats, for the entire financial year. Various other documents can also be presented along with the master budget in order to assist informed decision making. A document that consists of key financial ratios calculated based on information is included in the budget. These ratios will help to understand whether the master budget has been prepared realistically based on the actual past results.
Master budget preparation requires inputs of personnel from all the departments in the organization. There is a tendency of departmental managers to overestimate expenditure and underestimate revenues in order to achieve the budget easily. Furthermore, since business environments are constantly changing, budgets are often criticized as too rigid to adhere to.
What is a Flexible budget?
A flexible budget is a budget that adjusts or flexes for the changes in the activity level. Unlike in a static budget, which is prepared for a single activity level, a flexible budget is more sophisticated and useful. Here, irrespective of the budgeted volume of output, the revenues and costs will be compared with the adjusted results to the actual volume.
E.g. ABC Company incurred the following costs.
Selling price per unit = $14.6, material cost per unit = $2.50, labor cost per unit = $ 3, Factory overhead per unit = $2.4
ABC planned to sell 15,000 units for the month of March; however, managed to sell 18,000 units. Thus, the management decided to flex the static budget for the activity level of 18,000.
Flexible budgets are not rigid as static budgets; thus, are an appropriate tool for performance measurement to evaluate the performance of the managers. If the volume is fixed, then the managers can later claim that the demand and cost forecasts significantly changed from the budgeted levels and they were unable to achieve the budget. With a flexible budget, such situations will rarely occur. Flexible budgets are most appropriate for organizations that operate with an increased variable cost structure where the costs are mainly associated with the level of activity. On the other hand, flexible budgets are time-consuming and require more planning due to the alterations in activity levels.
What is the difference between Master Budget and Flexible Budget?
Master Budget vs Flexible Budget
Master budget is a financial forecast that contains all budgeted revenues and costs for the upcoming accounting year.Flexible budget is adjusted by incorporating the changes in the activity level.PurposeThe purpose of the master budget is to amalgamate many sub-budgets into a single one.The purpose of the flexible budget is to allow better comparisons with the actual results by assessing them against the actual activity levelActivity LevelMaster budget is prepared for a single activity level since is a static budget.Flexible budget can be prepared for multiple activity levels.Summary – Master Budget vs Flexible Budget
The difference between master budget and flexible budget mainly depends on the purpose they are prepared for. The budget prepared by amalgamating all the sub-budgets is referred to as the master budget whereas the budget that is prepared is for different activity levels is referred to as the flexible budget. If budgets are used effectively, they enable a wider range of benefits including revenue growth and effective cost control. Flexible budgets are particularly useful for organizations that have variable cost structures.
What is the difference between a master and a flexible budget?
Static Budget - the budget is prepared for only one level of production volume. Also called a Master budget. Flexible Budget - a summarized budget that can easily be computed for several different production volume levels.What is the difference between master budget and functional budget?
Master budget is a summary of all functional budgets. It gives an overall view of the firm's plan of action for the budget period. In a master budget a summary of functional budgets are incorporated. Master budget takes two forms – a budgeted profit and loss account and budgeted balance sheet.What is the primary difference between a budget and a flexed flexible budget?
A flexible budget is a budget that changes as per the activity level or production of units. The fixed budget is static and doesn't change all. On the other hand, a flexible budget is adjustable as per the necessity of the business. A fixed budget is always fixed.What is the difference between master budget and?
Key Difference – Master Budget vs Cash Budget The key difference between master budget and cash budget is that master budget is a financial forecast that consists of all the revenues and expenditure whereas cash budget records the predicted results of cash inflows and outflows for the accounting period. Tải thêm tài liệu liên quan đến nội dung bài viết The basic difference between a master budget and a flexible budget is that a: