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The President has authorized a Travel and Entertainment expense budget of $600,000 to the Sales Division and $300,000 to the Marketing Division. The Vice President of Sales has approved a budget of $200,000 for each region: Western, Central and Eastern.

Assume that your account structure contains three segments: Company, Cost Center and Account. Account 5000 is your Travel and Entertainment Expense account, and your company value is 01. The cost center values are defined as follows:

Value	Name	Children	Rollup Group
600	Corporate
500	Sales Division
510	Marketing Division
599	Total Divisions	500-598, 600	Divisions
100	Western Region
110	Central Region
120	Eastern Region
199	Total Sales Regions	100-198, 500	Regions
200	Publications
210	Public Relations
220	Trade Shows
299	Total Marketing	200-298, 510	Marketing

Define the First-Level Budget - Corporate Budget

• Define a Corporate Budget.

• Create a Corporate budget organization and assign to it the following detail account:
  01-600-5000

• Budget $900,000 to your Corporate budget using the Corporate budget organization.

• Define the summary template: D - Divisions - D. General Ledger summarizes the balance of your Corporate budget (master budget) and calculates the following summary account balance:
  01-599-5000 $900,000

This summary account balance serves as the controlling amount for the lower-level division budgets.

Define the Second-Level Budgets - Division Budgets

• Define budgets for Sales and Marketing. Assign the Corporate budget as the master budget for both the division-level budgets.

• Create a Sales budget organization and assign to it the following detail account:
  01-500-5000

• Create a Marketing budget organization and assign to it the following detail account:
  01-510-5000

• Budget $600,000 to the Sales budget using the Sales budget organization. Budget $300,000 to the Marketing budget using the Marketing budget organization.

• General Ledger summarizes the balance of your Sales and Marketing budgets (detail budgets) using the summary template, D - Divisions - D, and calculates the following summary account balance:
  01-599-5000 $900,000

Note that the division (detail) and corporate (master) cost centers are included in the same parent cost center and rollup group (Divisions). This ensures that General Ledger calculates the appropriate master and detail budget summary balances.

• General Ledger compares the summary balances between your master and detail budgets and checks for budget variances and violations.

• You can inquire on your master and detail budgets online using the Budget Inquiry window, or you can request standard reports such as the Master/Detail Budget Report.

• In this example, there is no budget variance or violation since the detail budget summary balance equals the master budget summary balance.

Define the Third-Level Budgets - Regional Budgets

• Define budgets for the Western, Central and Eastern Regions. Assign the Sales budget as the master budget for each of your regional budgets.

• Define the summary template: D - Regions - D. General Ledger summarizes the balance of your Sales budget (master budget) and calculates the following summary account balance:
  01-199-5000 $600,000

This summary account balance serves as the controlling amount for the regional budgets.

• Create a Western Region budget organization and assign to it the following detail account:
  01-100-5000

• Create a Central Region budget organization and assign to it the following detail account:
  01-110-5000

• Create an Eastern Region budget organization and assign to it the following detail account:
  01-120-5000

• Budget $200,000 to the Western Region budget using the Western Region budget organization. Budget $200,000 to the Central Region budget using the Central Region budget organization.

Due to having a larger sales force than other regions, the Eastern Region sales manager argues for a $300,000 Travel and Entertainment Expense budget. Lastly, budget $300,000 to the Eastern Region budget using the Eastern Region budget organization.

• General Ledger summarizes the balance of your Western, Central and Eastern Region budgets (detail budgets) using the summary template, D - Regions - D, and calculates the following summary account balance:
  01-199-5000 $700,000

Note that the region (detail) and sales division (master) cost centers are included in the same parent cost center and rollup group, Regions. This ensures that General Ledger calculates the appropriate master and detail budget summary balances.

• General Ledger compares the summary balances between your master and detail budgets and checks for budget variances and violations.

• You can inquire on your master and detail budgets online using the Budget Inquiry window or you can request standard reports such as Master/Detail Budget Report.

• In this example, a budget variance or violation exists since the detail budget summary balance exceeds the master budget summary balance by $100,000 ($700,000 - $600,000).

Master/Detail Budget Reports

• Budget Hierarchy Listing Lists master/detail budget relationships.

• Master/Detail Budget Report Compares budgeted amounts between master and detail budgets and highlights exceptions when detail budgets exceed their master budgets.

• Summary/Detail Budget Report Lists the detail accounts that roll up into a summary account for a particular budget and currency.

• Unbudgeted Master/Detail Accounts Report Lists the transactions in the detail budget for which there are no corresponding budgeted amounts in the master budget.

• Budget Organization Range Listing Lists details including budgetary control options of budget organizations by account range.