Components of Budgetary Control — Master Budget and Functional Budgets

## Components of a Budgetary Control System

### Master Budget

• The overall comprehensive plan representing the financial policy of a business for a defined period
• Includes all individual (functional) budgets
• Acts as the blueprint for the company's operations

### Functional Budgets

Detailed budgets specific to different functions or departments. Classified into four types:

#### (a) Physical Budgets — Quantitative terms

• Sales quantity budget
• Production quantity budget
• Inventory budget
• Manpower requirements budget

#### (b) Cost Budgets — Cost-related information

• Manufacturing cost budget
• Selling cost budget
• Administration cost budget
• Research and Development cost budget

#### (c) Profit Budgets — Profitability estimation

• Sales budget (revenue side)
• Profit and Loss budget (income statement)

#### (d) Financial Budgets — Financial position

• Cash budget
• Capital expenditure budget
• Budgeted Balance Sheet

### Full List of Functional Budgets (Classification by Function)

1. Sales Budget

2. Production Budget

3. Plant Utilisation Budget

4. Direct Material Usage Budget

5. Direct Material Purchase Budget

6. Direct Labour (Personnel) Budget

7. Production/Factory Overhead Budget

8. Production Cost Budget

9. Ending Inventory Budget

10. Cost of Goods Sold Budget

11. Selling and Distribution Cost Budget

12. Administration Expenses Budget

13. Research and Development Cost Budget

14. Capital Expenditure Budget

15. Cash Budget