- Outline the sequence of components of the master budget
So, the sales budget is the starting point, as we discussed in the previous section. We also discussed some of the other components of the master budget that can happen once we have solid sales numbers to work from.
The components of the master budget interrelate, and it is important to prepare them in order, as information from one component is needed to complete the next! Take a look at this crazy flow chart for a manufacturing business!
So this gives you an overview of how each of the components of the entire budget work together. As a reminder, that this is a master budget for a manufacturing business. Also note, that we would be setting up the budgets in an Excel workbook with a sheet for each budget.
Now let’s look at the production budget!