Assume the following data for Pet Luggage Company

*Pet Luggage (PL) does not make any sales on credit. PL sells only to the public and accepts cash and credit cards;90% of its sales are to customers using credit cards, for which PL gets the cash right away, less a 3% transaction fee.

* Purchase of materials are on account. pays for half the purchases in the period of the purchase and the other half in the following period. At the end of March, PL owes suppliers $8,200. During April they plan to purchase direct materials worth $11,950.

* PL Plans to replace a machine in April at a net cash cost of $13,800

* 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 $21,500 of the manufacturing cost and $14,500 of the nonmanufacturing (fixed) cost for April.

* PL currently has a $2,100 loan at an annual interest rate of 24%. The interest is paid at the end of each month. If PL has more than $10,000 cash at the end of April it will pay back the loan. PL owes $5,500 in income taxes that need to be remitted in April. PL has cash of $5,100 on hand at the end of March.

Revenue Budget for the month of April

Units Selling Price Total Revenues

Cat-allac	500	215	107,500
Dog-eriffic	215	320	68,800
Total			176,300

Manufacturing Overhead Budget for the Month of April

Machine Set-up Costs	8,900
Processing costs	44,000
Inspection costs	448
Total	53,348

Direct Manufacturing Labor Costs Budget For the month of April

	Output units Produced	DMLH per unit	Total Hours	Hourly Wage Rate	Total
Cat-allac	520	3	1,560	10	15,600
Dog-eriffic	200	5	1,000	10	10,000
Total					25,600

Nonmanufacturing Costs Budget for the month of April

Salaries	18,700
Other Fixed costs	15,000
Sales Commissions	1,763
Total nonmanufacturing costs	35,463

Requirements

1.Prepare a cash budget for April for Pet Luggage

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 "0" for repayment of the loan if excess cash does not exceed $10,000 at the end of April.)

2.Why do Pet Luggages managers prepare a cash budget in addition to the revenue, expenses, and operating income budget?