This chapter describes the master budget as a summary of the planned activities of all of the units of the company, including production, sales, distribution, and finance. Along with the company's strategic and long‐term plan, the master budget is a helpful device for planning and measuring progress toward the company's objectives. In a conventional master budget, the emphasis is on the cost of specific inputs as management budgets the cost of operating individual responsibility centers. Items to be included for the first time in the master budget require supporting documentation and upper‐level management approval. One will agree that the master budget is one of the most effective means of planning and control. The chief financial officer (CFO) has an advanced warning system in place with appropriate monitoring of budgets and results. It allows the CFO to take the essential steps to correct the anticipated problems.