What is the purpose of a master budget?

The master budget serves as a comprehensive financial plan that consolidates all individual departmental budgets within an organization. This holistic approach allows management to get a complete view of the organization's financial goals and how various segments interact with each other. By integrating each department's projections and financial plans, the master budget provides a cohesive strategy for the organization to follow, ensuring that all parts are aligned with overall business objectives.

This comprehensive budget can also facilitate better resource allocation, performance evaluation, and strategic decision-making across the organization, as it incorporates various aspects of operations and finances. While other options mention important financial aspects, they do not capture the full scope and purpose of what a master budget is designed to achieve in a business context.