FREE IGNOU MCO-05 SOLVED ASSIGNMENT 2023

(d) Cash Budget and Master Budget:

Cash Budget:

– A cash budget is a financial plan that shows the projected cash inflows and outflows for a specific period, typically on a monthly basis.
– It helps in managing cash flow, ensuring that the company has enough cash to meet its financial obligations, and avoiding cash shortages.
– The cash budget takes into account receipts from sales, cash payments for expenses, investments, financing activities, and any opening or closing cash balances.

Master Budget:

– The master budget is a comprehensive financial plan that includes all the individual budgets of a company, such as the sales budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, selling and administrative expense budget, and the cash budget.
– It covers all aspects of the company’s operations and provides an overall view of the company’s financial performance and position.
– The master budget is usually prepared for a specific period, typically a year, and is updated periodically to reflect actual results.

In conclusion, understanding the distinctions between these various costing concepts and budgeting techniques is essential for managers and decision-makers to make informed choices, optimize resource allocation, and achieve the company’s financial objectives. Each technique serves a specific purpose and provides valuable insights into different aspects of a company’s financial performance.