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For large organisation, complete budget is very big. Therefore, a separate summary is prepared giving summarise about all the plans, policies and their effects over the business. The summarised budget of the entire concern is known as the "Master Budget". The outlines expected performances in different areas of the business. The object of the budget is to secure an overall co-ordination in the budgetory programme and accordingly it is utilised by the top management for exercising effective control over the business. First of all, department budgets are developed for integrating them into a master budget.
Once the sales budget has been prepared, the chief production executive develops a manufacturing budget showing the quantity of products to be manufactured, date and type. A production budget is prepared to assure that demands of sales department can be met. It gives the time for producing and time for despatching them. It also includes the expenditure likely to occur on the maintenance of these produced articles. It is prepared by considering sales demand and capacity of plant.
While developing a production budget one should plan production of a relatively even rate, though the sales budget indicates a highly seasonal sales forecast, because the production at even rate of output is usually more economical.
This budget gives the summary about the money to be received and to be spent during the budget period. The financial budget forecasts the profit and loss statement and the financial position of the concern at the end of the budget period. Thus, it helps the management for long term plan.
This budget is prepared for the use of top management members to know the profitability of a budgetary programme. This budget has no application in lower echelons of the organisation. Budgetary control cannot be exercised without the aid of the financial budget.
The capital expenditure budget is prepared with the object of making a planned and timely capital investment in the business. To ensure the availability of capital at the right time and to prevent disruption in the normal working of the enterprise, this budget maps out the future capital expenditure over along period of time.