Summary: 

Master budget is a comprehensive document of financial planning. A master budget is made up

of 3 main budgets. Operation budge, Capital expenditure budget, financial forecast. Operation
budget includes income-generating activities, revenue, and expenses. Master budget is the
combination of all low-level budget that are produced by all functional areas of companies. The
master budget also includes the budgeted financial statements such as financial plan and cash
forecast. As the master budget for the Health and Wellness company defines the different short
budget which starts from the Sales forecast budget to the cash flow budgets. The company has
different policies in different departments such as in the production side they produce 30% in
advance of sale forecast in order to meet the demand in future. On the collection side, they
collect 70% of its cash in the same quarter of sale and the remaining are received in the next.
And also in the payment department 50% payment is made when any purchase is being made. 
The above master budget incorporates all these policies into consideration in order to get a true
and fair result in the end. The total sales forecast for the year is 1200 units which are expected to
sell in this year and in the production budget, almost 13000 units are in the production which is
greater than the sale forecast. Sales units are more than the total production unit due to any
excess demand in future will help company to generate revenue. Which gives a very practical
view of Health and Wellness Company. By looking at the cash budget, if the actual results are in
line with the budgeted number there would be no short-term borrowing because the company has
sufficient cash available at the end. There are some policies which need to change in order to
make more appropriate budgets.

Recommendation:
Health and Wellness Company has a policy which is to produce 30% of next quarter sales, next
production quarter requirement is not enough because there are so many reasons that product
demand can increase and 30% will not be enough to maintain the customer requirements and
demand. Because maybe next quarter demand of certain product will be increased than 30% will
not enough to meet as per customer requirement and if the customer becomes dissatisfied or may
not receive goods on time, they started switching to competitor which badly impact our company
and profit as well. So holding inventory should be more than 50%, There should be a certain %
for bad debt while making a budget because Maybe some customer become bankrupt and they
will not be able to pay their amounts so there should be an estimated 5% bad debt which needs to
be incorporated in the budget not necessary in all quarters but we can adjust this amount of bad
debt at the end of each year.

Judgments:
All those assumptions and forecasting is are very easy to calculate but when it comes to a real
worth these are most difficult to predict. In the above master budget estimates for the sale
forecast are not real ones. According to my analysis, in order to forecast the Sales for whole year
while preparing the budget it is better to use the past history for the company and also future
external changes such as economic and consumer preference should be considered. Sale forecast
should be made very properly because all other budget demands upon the Sales forecast and this
is a revenue budget for Health and Wellness Company.
Another area for making a change is its ending inventory requirement which is only 30%, which
is a very small amount of inventory that can create serious trouble for the company at any time
when they face any sudden high demand from the customer. Other than these, the company has
not considered any % for the bad debt or any uncollectable amount from its customer. Because
not in every time company receive all its amount from its customer due to many reasons.
According to my analysis, they have fair policies for the collection of amounts from its customer
as well as paying their payment for purchase to the 

How this analysis will help the management:

Proper budget reporting helps management make sound choices in the long term. Management
uses budgets to measure staff and their department's efficiency. They may also use budgets to
assess and calculate a business unit's success in a large business enterprise or the entire
performance of a small business. To compare different programs, they may also use budgets.
Employees can feel a strain in budgeting situations between reporting real results and reporting
results that meet the predetermined targets generated by the budget. This creates a situation
where executives can choose to behave unethically and compel accountants not sponsored by the
operations to report favorable financial results