Budgeting & Forecasting › The Budgeting Process

What is a functional (departmental) budget?

Beginner

Answer

A functional budget is a budget for a particular function or department—sales, production, purchasing, marketing, HR. Each functional budget plans that area's activity and costs, and together they consolidate into the master budget. They align departmental plans with the overall organizational plan.
Real-world example The marketing department's functional budget plans campaign and staff costs for the year.

Common follow-ups: How do functional budgets relate to the master budget? | Give examples of functional budgets.