What is the main benefit of using a master budget?

The main benefit of using a master budget is that it coordinates all aspects of the business operations. A master budget is a comprehensive financial plan that consolidates all the individual budgets within an organization, including sales, production, expenses, and cash flow. This coordination is crucial because it ensures that all departments are aligned with the organization's overall goals and objectives.

By integrating various departmental budgets, the master budget helps in identifying any discrepancies and promotes collaboration among departments. It enables management to allocate resources effectively, prioritize initiatives, and create a cohesive financial strategy that guides the organization throughout the budget period. The coordination aspect also assists in performance evaluation, as it provides a benchmark against which actual performance can be compared. This holistic approach to budgeting ultimately enhances decision-making and contributes to achieving long-term organizational goals.