Budget manual
A budget manual is the internal rulebook for the budgeting process: it sets out who prepares each budget, in what order, by which deadline, and on what forms, so the master budget is built the same way every period.
See it move
A budget manual fixes the order budgets are built in. Following it, the sales budget of 10,000 units at €60 gives €600,000. That feeds the production budget, 10,000 units at €35 variable cost, €350,000. A separately prepared €80,000 admin budget is added, and the master budget's operating profit comes out to €170,000.
Check yourself
A company's budget manual requires the sales budget to be finalised before any other budget. This period's sales budget is 2,500 units at €80 each. The production budget that follows uses a variable cost of €50 per unit for those 2,500 units, and a separately prepared fixed overhead budget totals €40,000. Following the manual's sequence, what is the budgeted operating profit shown in the resulting master budget?