ssume 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

UnitsSelling PriceTotal 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 Luggage's managers prepare a cash budget in addition to the revenue, expenses, and operating income budget?