Question

For this discussion question, please describe the following items: Explain the master budgeting process What are the benefits to budgeting and how can it be utilized to provide feedback to a Company?

Answer 1

Master budget is the sum total of all individual budgets. Master budget presented either monthly or quarterly format and covers a company's entire fiscal year. It also includes the financial planning, cash-flow forecast and budgeted profit and loss account and balance sheet of the organization. A master budget is the central planning tool that a management team uses to direct the activities of a corporation, as well as to judge the performance of its various responsibility centers.

Benefits of a budgeting

1. Budget an indicator of the costs and revenues linked to each of your activities.

2. It will help in determining the spending unnecessarily on items and services that do not contribute to attaining your financial goals. If you are working with limited resources, budgeting makes it easier to make ends meet.

3. With budgeting, you are clear on what money is coming in, how fast it goes out, and where it is going to.Budgeting saves you from wondering every end of the month where your money went. A budget enables you to know what you can afford, take advantage of buying and investing opportunities, and plan how to lower your debt.

4. It also tells you what is important to you based on how you allocate your funds, how your money is working for you, and how far you are towards reaching your financial goals.

5. It also helps in deciding how much money you need to run you business.

6. Also tells the what is the important costs need to be incurred and what can be left to minimize the cost.

7. It can alarm you potential funds problems in advance.

How can it be utilized to provide feedback to a Company;

Once the period ends the companies compare actual  with the budget. It is the stage where company will know whether budget came in line with the planned expenditure and income.

Also should take necessary actions in next period to control the cost more.