The master budget consists of
1. sales budget
2. production budget
3. various expense budget
4. capital expenditures budget
5. cash budget
The master budget is the sum of all the departmental budgets, cash flow projections, and financing strategies that make up the organization as a whole. A pricey method, master budgets consist mostly of overhead, production costs, and expenses. Master budgeting is used in the budgeting process, and it always produces the desired results.
In a master budget first comes the sales budget then the production budget is needed to figure out direct materials, direct labor and manufacturing overhead budgets. Once these are all done, then comes the finished goods inventory budget. Once all of these budgets are done, we can do a cash budget, income statement and balance sheet to finish off the process.
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