Operating budget is an important component of a Master Budget.
The operating budget focuses on the business operations and presented in the form of a forecasted income statement or commonly known as profit and loss statement.
Supporting the operating budget, there are 3 major sub-budgets such as:
1. Sales or revenue budget which shows the forecasted sales and revenue derived from sales and marketing plans and strategies.
2. Purchase or cost of sales budget which shows the cost directly relating to sales. Netting off both the sales and purchase budgets will give you the forecasted profit margin or gross profit.
3. Operating expenses budget which shows all expenses incurred in the course of operating the business. This includes staff salary, office rental, printing, stationery, depreciation, etc.
