Budgeting & Forecasting › The Master Budget
What is the link between budgeted contribution and the master budget?
IntermediateAnswer
Budgeted contribution (sales less variable costs) is a key intermediate figure feeding the budgeted income statement under marginal costing, showing how much each product/segment contributes to covering fixed costs and profit. It also supports break-even and decision analysis within the budgeting process.
Contribution = Sales - Variable costs; then less fixed costs = profit.Real-world example The master budget uses budgeted contribution to show how sales cover fixed costs and generate profit.