What Are The Advantages &

Disadvantages of a Master Budget?

Team B

ACC 561

What is a Master Budget?

A Master Budget is a collection of smaller budgets within a company.

These smaller budgets are grouped into two major areas:

• Operating Budgets: Directly related to the creation of the product/service.

• Financial Budgets: Expenditures from the Operating Budgets but do not

have a direct relationship to the creation of products or services.

(Jane, June)

(Kimmel 1037)

Advantages

• High level visualization of the company’s finances.

• Makes identification of possible future fiscal issues easier.

• High level designation of resources without worrying about smaller details.

Disadvantages

• No specificity in the data between departments or work groups.

• Lack of details that can affect other budgets within the organization.

• Language is usually C-level oriented and may not be easily understood by

middle management or employees.

References

• Jane, M. (June 2012). What is a Master Budget. Retrieved from

http://www.ehow.com/info_7806988_master-budget.html

• Kimmel, Paul D.. Accounting: Tools for Business Decision Making, 4th Edition. John

Wiley & Sons, 07/2011.