| Course | AC420 Cost Accounting |
|---|---|
| Unit | Unit 6 |
| Paper type | Master budget schedule |
| Length | About 560 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Accounting |
| Updated | October 2026 |
Free sample paper for AC420 Unit 6
146,000 Skillets for the Holidays and a Line That Pours 115,000: A Unit 6 Master Budget With a Level Plan
[Student Name]
Purdue University Global
AC420: Cost Accounting
Unit 6 Master Budget Schedule
[Instructor Name]
[Date]
Bellhaven Iron Works and every figure are composite; the textbooks and study cited are real.
Assumptions
Price $16.90 a skillet. Ending finished goods policy: 30 percent of next quarter's sales. Beginning finished goods: 25,200. First quarter of next year: 88,000 skillets. Molding line capacity: 115,000 skillets a quarter. Iron: 7.4 pounds a skillet at $0.29 a pound. Other variable manufacturing cost: $3.694 a skillet. Collections: 40 percent in the quarter of sale, 60 percent the next. Commission: 6 percent of sales. Fixed cash manufacturing costs $520,000 and fixed selling and administrative costs $310,000 a quarter. Beginning receivables $1,297,920; beginning cash $180,000.
Schedule 1: Sales
Units: 84,000; 92,000; 118,000; 146,000; year 440,000. Revenue: $1,419,600; $1,554,800; $1,994,200; $2,467,400; year $7,436,000.
Schedule 2a: Production Under the Stated Policy
Each quarter's production equals its sales plus desired ending inventory less beginning inventory.
1. Quarter 1: 84,000 + 27,600 minus 25,200 = 86,400.
2. Quarter 2: 92,000 + 35,400 minus 27,600 = 99,800.
3. Quarter 3: 118,000 + 43,800 minus 35,400 = 126,400. Over capacity.
4. Quarter 4: 146,000 + 26,400 minus 43,800 = 128,600. Over capacity.
Total required: 441,200.
The stated policy cannot be met, because it asks the line for 126,400 and 128,600 skillets in the two quarters when it can pour only 115,000, so the budget keeps the failed schedule on the page and shows why it had to change.
Schedule 2b: Level Production Plan
Total required production of 441,200 spread evenly: 110,300 a quarter, within capacity. Ending finished goods: 51,500; 69,800; 62,100; 26,400. Inventory peaks at 69,800 in June and never goes negative, and the year ends at the policy's own target of 26,400. Year-total columns sum flows but take inventory from the fourth quarter.
Schedule 3: Iron Purchases
Production 110,300 x 7.4 pounds = 816,220 pounds a quarter, $236,703.80. Because production is level and the foundry holds a constant two-week stock, purchases equal usage each quarter. Year: 3,264,880 pounds, $946,815.20.
Schedule 4: Cash Budget
Collections: $1,865,760; $1,473,680; $1,730,560; $2,183,480.
Disbursements: iron $236,703.80, other variable manufacturing $407,448.20, fixed manufacturing $520,000, commission at 6 percent of each quarter's sales, and fixed selling and administrative $310,000. Totals: $1,559,328; $1,567,440; $1,593,804; $1,622,196.
Net cash flow: $306,432; $(93,760); $136,756; $561,284. Ending cash: $486,432; $392,672; $529,428; $1,090,712.
What the Budget Shows
The second quarter is the trough. Cash arrives a quarter late, so the second quarter lives mostly on the slow first quarter's sales while the line pours at the full level rate. By June, 69,800 finished skillets hold about $407,600 of variable cost, cash that will not come back until the holiday sales are collected. The level plan costs that working capital but avoids overtime or a second shift for half the year. Budgeting should be treated as a planning tool that exposes such conflicts, not only a set of targets (Datar & Rajan, 2021), and a survey of North American companies found most still rely on budgets for planning even as they criticize them (Libby & Lindsay, 2010). Each schedule draws only on the one above it, the layout Garrison et al. (2021) recommend so every cell traces back to the forecast.
References
Datar, S. M., & Rajan, M. V. (2021). Horngren's cost accounting: A managerial emphasis (17th ed.). Pearson.
Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2021). Managerial accounting (17th ed.). McGraw Hill.
Libby, T., & Lindsay, R. M. (2010). Beyond budgeting or budgeting reconsidered? A survey of North-American budgeting practice. Management Accounting Research, 21(1), 56-75. https://doi.org/10.1016/j.mar.2009.10.003
AC420 Unit 6 instructions, in plain terms
The sixth AC420 unit asks you to build a master budget forward from a sales forecast. List the assumptions first: prices, inventory policy, capacity, material use, collection pattern and fixed costs. Build the sales schedule in units and dollars by quarter with a year total. Derive production from sales plus desired ending inventory less beginning inventory, and check every quarter against capacity. If the policy cannot be met, show the conflict and present a revised plan rather than quietly changing the numbers. Base material purchases on the plan you adopt. Build the cash budget from collections and disbursements, showing net cash flow and ending cash each quarter. Explain what the budget reveals about working capital and timing. Make every figure traceable to a schedule above it. Cite the textbook and research on budgeting practice in APA 7.
Inside the AC420 Unit 6 example
The sample lists its assumptions in one paragraph, from the $16.90 price to $180,000 of beginning cash. The sales schedule reaches 440,000 skillets and $7,436,000. The policy-based production schedule computes 86,400, 99,800, 126,400 and 128,600 and flags the last two against capacity. The highlighted sentence explains why the failed schedule stays visible. The level plan spreads 441,200 units evenly, with finished goods peaking at 69,800 in June and ending at 26,400. Iron purchases run at 816,220 pounds and $236,703.80 a quarter. The cash budget collects $1,865,760, $1,473,680, $1,730,560 and $2,183,480, and ending cash dips to $392,672 in the second quarter. A closing section explains the trough and the working capital cost, citing Datar and Rajan, Libby and Lindsay, and Garrison and colleagues.
Reading the AC420 Unit 6 grading rubric
AC420 master budgets are graded on accuracy, internal consistency and the handling of constraints. Each schedule must draw on the one before it, so a change in the forecast would flow through every figure. Production must follow the inventory formula and be tested against capacity. Graders give significant credit when a conflict between policy and capacity is identified and resolved openly, with the original schedule shown. Purchases must rest on the adopted production plan. The cash budget should separate collections by quarter of sale and list each disbursement, ending with net flow and cash balance. Explaining what the budget reveals, such as a cash low point and its cause, shows the budget was read, not just built. The budget unit's last points cover year-total conventions, labeling and APA 7 form.
Common AC420 Unit 6 mistakes, and how to avoid them
Many Unit 6 budgets apply the inventory policy without checking capacity, producing quarters the plant cannot meet. Others revise the plan without showing why, so the reader cannot follow the change. Purchases are based on the rejected production schedule. Year totals add up inventory balances as if they were flows. Collections ignore the lag, treating all sales as cash in the quarter. Fixed costs are left out of disbursements. The budget stops at numbers with no comment on what they mean. If your problem has a different collection pattern, a raw materials policy or a financing requirement, our writers can build the schedules and the cash budget from your section's assumptions.
Get an AC420 Unit 6 example written to your instructions
Your section's Unit 6 case supplies the forecast, prices, inventory rules, material standards and collection terms; send those, any capacity limits and the rubric. Schedules come back linked so each figure traces to the forecast, with any policy that conflicts with capacity shown failing before it is replaced. First custom sample free, delivered inside 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC420 Unit 6 questions, answered
Is replacing the inventory policy allowed if the problem states it?
Only with the conflict shown. The sample keeps the stated policy on the page, flags the quarters where it exceeds capacity, and then presents the level plan as a necessary revision. If your problem has no capacity limit, the policy stands as given and the second production schedule is left out entirely, which keeps the budget shorter.
Why does the cash trough fall in the second quarter?
Because cash arrives a quarter late. Sixty percent of each quarter's sales are collected the following quarter, so the second quarter lives mostly on the slow first quarter's sales while production and iron purchases run at the full level rate. By the fourth quarter, third-quarter collections are arriving and the position recovers.
Does the budget need a budgeted income statement?
Many AC420 Unit 6 problems end at the cash schedule; others continue to a budgeted income statement and balance sheet. When those are required, cost of goods sold uses the budgeted unit cost times skillets sold, and the ending finished goods balance comes from the level plan. The sample adds them only when the instructions call for them.
Where can I find a free AC420 Unit 6 sample paper?
This page holds a complete AC420 Unit 6 master budget schedule for a composite cookware maker, with sales, two production schedules, iron purchases, a cash budget and APA 7 references.
Why does the AC420 Unit 6 budget replace the inventory policy?
The policy asks for 126,400 and 128,600 skillets in the third and fourth quarters, beyond the line's 115,000 capacity. A level plan of 110,300 a quarter meets the same year-end inventory without exceeding capacity.