Animal Transport (AT) does not make any sales on credit. AT sells only to the public and accepts cash and credit cards; 90% of its sales are to customers using credit cards, for which AT gets the cash right away, less a 2% transaction fee. Purchases of materials are on account. AT pays for half the purchases in the period of the purchase and the other half in the following period. At the end of March, AT owes suppliers $8,100. During April they plan to purchase direct materials worth $12,285. AT 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 $20,500 of the manufacturing cost and $11,000 of the nonmanufacturing (fixed) cost for April. AT currently has a $2,500 loan at an annual interest rate of 24%. The interest is paid at the end of each month. If AT has more than $10,000 cash at the end of April it will pay back the loan. AT owes $5,800 in income taxes that need to be remitted in April. AT has cash of $5,300 on hand at the end of March. Cat-allac Dog-eriffic Revenue Budget For the Month of April Units Selling price Total Revenues 500 $ 215 $ 107,500 215 320 68,800 176,300 Total Manufacturing Overhead Budget For the Month of April Machine setup costs 8,900 Processing costs 44,000 448 Inspection costs 53,348 Total Direct Manufacturing Labor Costs Budget For the Month of April Output units DMLH Total Hourly produced per unit Hours Wage Rate 520 3 1 ,560 $ 10 $ 5 1,000 $ Total 15,600 Cat-allac Dog-eriffic 200 10 10,000 25,600 Total Nonmanufacturing Costs Budget For the Month of April Salaries $ Other fixed costs 18,000 19,000 1,763 Sales commissions $ 38,763 Total nonmanufacturing costs Assume the following data for Pet Transport Company: (Click the icon to view the assumptions.) (Click the icon to view budget information.) Requirements 1. Prepare a cash budget for April for Pet Transport. 2. Why do Pet Transport's managers prepare a cash budget in addition to the revenue, expenses, and operating income budget? Requirement 1. Prepare a cash budget for April for Pet Transport. Begin the cash budget by calculating the cash available, then total disbursements, and finally the effects of financing and the ending cash balance. (Round your answers to the nearest whole dollar. Enter "O" for repayment of loan if excess cash does not exceed $10,000 at the end of April.) Cash Budget April 30 Cash balance, beginning Add receipts Total cash available for needs Deduct disbursements Total disbursements Financing Repayment of loan Interest on loan Total effects of financing Ending cash balance, April 30
