Animal Gear Company makes two pet carriers, the Ccat-allac and the Dog-eriffic. They are both made of plastic with metal doors, but the Cat-allac is smaller. Information for the two products for the month of April is given in the following tables:

Input prices

Direct materials

Plastic $5 per pound

Metal $4 per pound

Direct Manufacturing labor $10 per direct manufactufing labor-hour

Input Quantities per Unit of Output

	Cat-allac	Dod-eriffic
Direct materials
Plastic	4 pounds	6 pounds
Metal	0.5 pounds	1 pound
Direct manufacturing labor-hours	3 hours	5 hours
Machine-hours (MH)	11 MH	19MH

Inventory Information, Direct Materials

	Plastic	Mmetal
Beginning inventory	290 pounds	70 pounds
Target ending inventory	410 pounds	65 pounds
Cost of beginning inventory	$1,102	$217

Animal Gear accounts for direct materials using a FIFO cost flow assumption

Sales and Inventory Information, Finished Goods

	Cat-allac	Dog-eriffic
Expected sales in units	530	225
Selling price	$205	$310
Target ending inventory in units	30	10
Beginning inventory in units	10	19
Beginning inventory in dollards	$1,000	$4,650

Animal Gear uses a FIFO cost flow assumption for finished goods inventory.

Animal Ggear uses an activity-based costing system and classifies overhead into three activity pools; Setup, Processing, and Inspection. Activity rates for these activities are $105 per setup-hour, $10 per machine-hour, and $15 per inspection-hour, respectively. Other information follows

Cost-Driver Information

	Cat-allac	Dog-eriffic
Number of units per batch	25	9
Setup time per batch	1.50 hours	1.75 hours
Inspection time per batch	0.5 hour	0.7 hour

Nonmanufacturing fixed costs for March equal $32,000, half of which are salaries. Salaries are expected to increase 5% in April. The only variabe nonmanufacturing cost is sales commission, equal to 1% of sales revenue.

Assume the following information: Animal Gear (AG) does not make any sales on credit. AG sells only to the public and accepts cash and credit cards; 90% of its sales are to customers using credit cards, for which AG gets the cash right away, less a 2% transaction fee.

Purchases of materials are on account. AG pays for half the purchases in the period of the purchase and the other half in the following period. At the end of March, AG owes suppliers $8,000.

AG plans to replace a machine in April at a net cash cost of $13,000

Labor, other manufacturing costs, and nonmanufacturing costs are paid in cash in the month incurred except of course depreciation, which is not a cash flow. Depreciation is $25,000 of the manufacturing cost and $10,000 of the nonmanufacturing cost for April.

AG currently has a $2,000 loan at an annual interest rate of 12%. The interest is paid at the end of each month. If AG has more than $7,000 cash at the end of April it will pay back the loan. AG owes $5,000 in income taxes that need to be remitted in April. AG has cash of $5,900 on hand at the end of March.

1.Prepare Income Statement for Animal Gear