The budget hierarchy in this example consists of three levels, the Corporate level, the Division level and the Region/Department Level.
At the Corporate level is the Corporate Budget. This budget is a master budget and is at the top of the hierarchy. The Division level is the second tier in the budget hierarchy and is tied to the Corporate Budget. At this level are two budgets, the Sales Division budget and the Marketing Division budget. The budgets at this level are detail budgets. The third level of the hierarchy has six budgets, three connected to the Sales Division budget and three connected to the Marketing Division budget.
Branching off from the Sales Division Budget are the Western Region Budget, the Central Region Budget, and the Eastern Region Budget. Underneath the Marketing Division budget are the Publications budget, the Public Relations budget and the Trade Shows budget. From the point of the Division level, the six regions are detail budgets.
In a budget hierarchy, each budget is either classified as a master budget or a detail budget. Depending on the level in the hierarchy, a budget can be either a master budget, a detail budget, or act as both. A budget that acts as both a master and a detail budget is a detail budget that also has detail budgets of its own. In this example, the Sales budget is a subsidiary of the Corporate budget which makes it a detail budget. It is also the master budget to the Regional budgets, the Western budget, the Central budget, and the Eastern budget.