Principal components of a master budget include
A) production budget
B) sales budget
C) capital expenditures budget
D) all of these

Question

Quizplus · Accepted Answer

A master budget typically includes various components, but the three core components are the production budget, sales budget, and the capital expenditures budget. The production budget outlines the number of units that must be produced each period to meet sales demand, which in turn drives demand for raw materials, labor, and overhead expenses. The sales budget outlines the projected sales volumes and revenues by product or service category, which is the primary driver of and helps to inform the production budget. The capital expenditures budget outlines the planned investments in long-term assets, such as property, plant, and equipment, which is essential for supporting future growth initiatives and maintaining the company's competitive position. Thus, all three components are necessary to develop a comprehensive and well-aligned master budget.

Principal Components of a Master Budget Include