The master budget includes the budgets for the financial statements and all of the supporting schedules for the company. It is divided into the operating budget, the capital budget, and the financial budget. Every company’s budget will be unique, based on whether it is a service company, merchandising company, or manufacturer, as well as on other details, such as the type of service it provides or the type of products it sells or manufactures.
The Unknown Comic, Inc., is a manufacturer of large red shoes worn by clowns. The Unknown Comic uses a job order cost system and will prepare the following budgets for the year ending December 31, 2017:
You would also prepare the following budgets, but they are not included in this example:
Figure 13.2 below illustrates the components of the master budget for the company.
