| Course | BUS 510 Managerial Accounting |
|---|---|
| Module | Module 6 |
| Paper type | Master budget paper |
| Length | About 1,040 words, 6 pages |
| Format | APA 7 student paper |
| School | Aspen University |
| Program | MBA |
| Updated | October 2026 |
Free sample paper for BUS 510 Module 6
Spending in Winter to Sell in Spring: A Master Budget and Cash Budget for a Seasonal Garden Center
Student Name
MBA Program, Aspen University
BUS 510: Managerial Accounting
Instructor Name
Month Day, Year
Spending in Winter to Sell in Spring: A Master Budget and Cash Budget for a Seasonal Garden Center
Bluestem Garden Center, a composite business in Lawrence, Kansas, sells plants, trees, soil, tools and outdoor furniture. Its year is lopsided. Growers must be paid when plants are ordered in winter, the store fills with stock in March, and customers arrive in force from April through June. Summer and fall bring smaller peaks for perennials and holiday decorations. For years the owner, Karen Wiese, managed by instinct and a large bank balance built in good springs, but a wet spring last year nearly emptied the account. This paper prepares the coming year's quarterly master budget and uses it to plan cash.
Assumptions
The budget rests on several assumptions drawn from three years of records. Annual sales will be $2.6 million, distributed 10% in the first quarter, 55% in the second, 25% in the third and 10% in the fourth. Ninety percent of sales are paid by card or cash at the time of sale; the remaining 10%, sales to landscapers on account, are collected the following quarter. Cost of goods is 58% of sales. Purchases are made one quarter ahead of sales, and suppliers are paid in the quarter of purchase. Fixed operating costs are $95,000 per quarter, including $12,000 of depreciation, and seasonal staff cost 9% of each quarter's sales. The center begins the year with $40,000 of cash and $26,000 owed by landscapers from the prior fourth quarter, and it wants to keep at least $25,000 of cash on hand.
The Sales Budget
| Quarter | 1 | 2 | 3 | 4 | Year |
|---|---|---|---|---|---|
| Sales | $260,000 | $1,430,000 | $650,000 | $260,000 | $2,600,000 |
The Purchases Budget
Because plants and goods are bought one quarter before they are sold, each quarter's purchases equal 58% of the following quarter's sales. First-quarter purchases cover the spring peak; fourth-quarter purchases cover next year's first quarter, assumed equal to this year's.
| Quarter | 1 | 2 | 3 | 4 | Year |
|---|---|---|---|---|---|
| Purchases | $829,400 | $377,000 | $150,800 | $150,800 | $1,508,000 |
The Operating Expense Budget
Cash payments for operating expenses are $12,000 lower each quarter, because depreciation is an expense but not a payment.
| Quarter | 1 | 2 | 3 | 4 | Year |
|---|---|---|---|---|---|
| Seasonal staff, 9% of sales | $23,400 | $128,700 | $58,500 | $23,400 | $234,000 |
| Fixed costs including depreciation | $95,000 | $95,000 | $95,000 | $95,000 | $380,000 |
| Total operating expenses | $118,400 | $223,700 | $153,500 | $118,400 | $614,000 |
The Cash Budget
Collections each quarter equal 90% of that quarter's sales plus 10% of the previous quarter's. Each quarter begins with the cash the previous quarter ended with, a link worth checking because it is the most common error in cash budgets. In the first quarter, the center pays for almost all of its spring stock while collecting little, so cash before financing falls about $636,000 below zero. To keep its $25,000 minimum, the center must borrow $660,800 on a seasonal line of credit. Spring collections allow full repayment in the second quarter, with interest of $16,520 at 10% a year for one quarter.
The budget also shows that the risk lies in one quarter. If spring sales came in 20% below plan, second-quarter collections would fall by about $257,000, and the center could repay only part of the line until summer. That is the scenario that nearly emptied the account last year.
| Quarter | 1 | 2 | 3 | 4 |
|---|---|---|---|---|
| Beginning cash | $40,000 | $25,000 | $71,980 | $507,680 |
| Collections from sales | $260,000 | $1,313,000 | $728,000 | $299,000 |
| Payments for purchases | $829,400 | $377,000 | $150,800 | $150,800 |
| Payments for operating expenses | $106,400 | $211,700 | $141,500 | $106,400 |
| Cash before financing | minus $635,800 | $749,300 | $507,680 | $549,480 |
| Borrowing, or repayment with interest | $660,800 | minus $677,320 | 0 | 0 |
| Ending cash | $25,000 | $71,980 | $507,680 | $549,480 |
Budgeted Income for the Year
The schedules also produce a budgeted income statement. Sales of $2,600,000 less cost of goods of $1,508,000 leave gross profit of $1,092,000. Operating expenses of $614,000, including $48,000 of depreciation, and interest of $16,520 bring budgeted operating profit to about $461,000 before the owner's compensation and taxes. Comparing this figure with the year-end cash balance of about $549,000 shows the difference that depreciation, collections and the timing of next year's purchases make between profit and cash.
How the Budget Will Be Used
A budget is only as useful as the conversations it prompts. Wiese will review actual results against the budget each month with her two department managers, nursery and hard goods, focusing on sales and purchases. If spring sales run behind by more than 10% by mid-April, she will cut summer orders and seasonal staff hours before the gap reaches cash. Managers will be judged on gross margin and inventory left at the end of each season, not on hitting the sales figure exactly, so that they have no reason to inflate or pad their estimates.
What Budgets Are For
Hansen et al. (2003) reviewed research and practice on budgeting and found that budgets serve several purposes at once: planning, coordinating departments, setting targets, evaluating performance and allocating resources. These purposes can conflict. A budget used to evaluate managers invites cautious targets, while a budget used for planning needs honest estimates. Hope and Fraser (2003) went further, arguing that fixed annual budgets encourage gaming, slow responses to change and consume management time, and that leading firms replaced them with rolling forecasts and relative targets. For a small garden center, the planning purpose matters most, and weather makes any fixed annual figure unreliable.
Recommendations
Wiese should arrange the seasonal credit line before December, sized at $700,000 to allow for a late spring. She should replace the annual budget with a rolling forecast updated each quarter for the next four quarters, adjusting sales for weather and early orders from landscapers. And she should negotiate with her largest grower to pay half of spring orders in April, which would cut first-quarter borrowing by about $415,000. Datar and Rajan (2021) treat the timing of supplier payments as one of the most direct levers a manager has over cash needs.
Conclusion
The master budget shows that Bluestem's profitable year contains a dangerous winter, when nearly all spring stock must be paid for before customers arrive. The cash budget turns that danger into a specific borrowing need and repayment date. Research on budgeting suggests that, for a business this exposed to weather, a rolling forecast will serve better than a fixed annual budget.
References
Datar, S. M., & Rajan, M. V. (2021). Horngren's cost accounting: A managerial emphasis (17th ed.). Pearson.
Hansen, S. C., Otley, D. T., & Van der Stede, W. A. (2003). Practice developments in budgeting: An overview and research perspective. Journal of Management Accounting Research, 15(1), 95-116. https://doi.org/10.2308/jmar.2003.15.1.95
Hope, J., & Fraser, R. (2003). Who needs budgets? Harvard Business Review, 81(2), 108-115.
What the BUS 510 Module 6 instructions ask for
Aspen's catalog includes generating budgets among the core skills of BUS 510, so a budgeting module usually asks students to prepare a master budget or part of one and evaluate the process. Use the Module 6 directions in your classroom for format; this example prepares a quarterly master budget with a cash budget. Start with the sales budget, since everything else depends on it, and explain the assumptions behind it. Build the purchases or production budget, the operating expense budget and the cash budget in order, showing how each uses the one before. Identify periods when cash runs short and how they will be financed. Present budgets in clear tables with totals. Evaluate the budget's limits and the process, using research. Recommend improvements that make the budget more useful to managers.
How this BUS 510 Module 6 example is built
The paper opens with Bluestem Garden Center's seasonal pattern: plants and supplies are ordered in winter, the store fills in March and most sales come in April through June. The sales budget table spreads $2.6 million across four quarters. The purchases budget sets cost of goods at 58% of sales and shows inventory building before spring. The operating expense budget separates seasonal staff from fixed costs. The cash budget table tracks beginning cash, collections, payments and borrowing, showing cash about $636,000 below zero before borrowing in the first quarter and full repayment in the second. Hansen, Otley and Van der Stede's Journal of Management Accounting Research review and Hope and Fraser's Harvard Business Review article frame a discussion of budgets' purposes and problems, and the conclusion adopts a rolling forecast.
BUS 510 Module 6 rubric: what earns full marks
Budgeting papers in an MBA accounting course are marked on accurate, connected schedules, reasonable assumptions and thoughtful evaluation. This example builds each budget from the one before, so the figures in the cash budget can be traced back to the sales budget. Assumptions about seasonality, collection, purchasing and payment are stated before the tables, which lets a grader judge them. Totals add across quarters and agree with annual figures. The cash budget is used for its real purpose, identifying when and how much the company must borrow. The evaluation draws on Hansen, Otley and Van der Stede's research review, Hope and Fraser's critique and Datar and Rajan's text to discuss what budgets are for and where they fail, and the recommendation of a rolling forecast follows from that discussion.
Common BUS 510 Module 6 mistakes, and how to avoid them
The most common errors in Module 6 are budgets that do not connect, such as a cash budget whose collections do not match the sales budget, and totals that do not add. Build each schedule from the previous one and check every total. Another frequent gap is unstated assumptions; explain how you set sales, collection timing and purchase timing. Use the cash budget to make a decision, such as how much to borrow and when, rather than only presenting it. Remember that profit and cash differ; depreciation appears in expenses but not in payments. Do not ignore seasonality if the business has it, because annual averages hide cash gaps. In your evaluation, address how the budget will be used and its behavioral effects. Finally, keep tables readable by rounding to thousands and labeling every row.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official Aspen University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
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BUS 510 Module 6 questions, answered
What does BUS 510 Module 6 usually ask for?
Aspen's BUS 510 covers budgeting in this module, so preparing a master budget or cash budget and evaluating the budgeting process is typical. Check your classroom prompt.
What is a master budget?
A set of connected budgets for a period, usually starting with sales and moving through purchases or production, operating expenses, cash and budgeted financial statements.
Why is a cash budget important?
It shows when cash will be short or surplus, so managers can arrange borrowing in advance or plan how to use extra cash.
Where can I find a free BUS 510 Module 6 sample paper?
The complete paper is above: a garden center's quarterly master budget with sales, purchases, expense and cash budgets, a first-quarter shortfall and a rolling forecast recommendation.
What is a rolling forecast?
A forecast updated regularly, often each quarter, that always looks a fixed period ahead, instead of a budget fixed once a year.