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

Requirements:

1. Prepare a cash budget for April for Animal Transport.

2. Why do Animal Transport's managers prepare a cash budget in addition to the revenue, expenses and operating income budget?

Budget information Assumptions - 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 3% 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 $8,800. During April they plan to purchase direct materials worth $21,230. - AT plans to replace a machine in April at a net cash cost of $13,500. - Labour, 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 $22,500 of the manufacturing cost and $13,000 of the nonmanufacturing (fixed) cost for April. - AT currently has a $2,100 loan at an annual interest rate of 24%. The interest is paid at the end of each month. If AT has more than $7,000 cash at the end of April it will pay back the loan. AT owes $5,700 in income taxes that need to be remitted in April. AT has cash of $5,600 on hand at the end of March