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What is the budgeted cost of goods manufactured? What is the order of dependency among the master budget schedules? How does the master budget serve as a coordination tool? How is the budgeted balance sheet prepared? How do you build the master budget for a service organization versus a manufacturer? How does the master budget support scenario and sensitivity analysis? How do you incorporate financing and dividends into the master budget? How do you validate/sense-check a completed master budget? How does the capital budget integrate into the master budget? How do you model working capital changes in the master budget?
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How do changes in one budget cascade through the master budget?

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Answer

Because the budgets are interlinked, a change in one flows through the rest. For example, raising the sales forecast increases production, which raises materials, labor, and overheads, changing costs, profit, receivables, payables, inventory, and cash—altering all three pro forma statements. This interdependence is why master budgets are best modeled so changes recalculate automatically.
Real-world example Increasing the sales budget 10% ripples through production, purchasing, cash, and the budgeted balance sheet.

Common follow-ups: Why model the master budget? | What happens if sales change?

Types of Budgets Cash Budgeting The Master Budget
All 34 The Master Budget questions