You work as a Management consultant and one of your clients Planet Pets has asked you to complete a fewplanninginitiativesthattheywouldliketoputinplacewithyourhelp. Theseinclude;

1. To better manage their cash flow requirements preparation of a cash budget and recommendations as to any potential financing arrangements that may be required.

2. Prepare and interpret a variance analysis based on Planet Pets operational budget.

3. Advise Planet Pets on sources of finance.

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1. Planet Pets manufacture chemical free toys for domestic animals and designer collars, for customers pets. Both of their products are manufactured and warehoused on the Gold Coast and sold to various wholesalers and retail outlets throughout Australia

The business has experienced significant growth over the last year and the owner of the business has decided that now is a really good time to start forward planning and develop a more sophisticated control system, to ensure that there is sufficient cash available in order to meet the operational needs of the business.

As the management consultant of Planet Pets, you have been tasked with preparing a cash budget for 6 months that will be incorporated into the businesss overall business plan.

The following information has been obtained from the sales department regarding the upcoming sales forecasts for the next six (6) months January to June:

1. Prepare a cash budget for 6 months beginning January

2. b) Advise the company on the debt financing that could be used to deal with cash shortfalls and any major payments in the cash budget. Your advice in this part should explain and provide reasons for your recommendations. (Maximum 200 words) information

Budgeted sales (in dollars) November December January February March April May June Sales information (in dollars) Pet Toys 80,000 110,000 100,000 90,000 85,000 95,000 70,000 62,500 Designer Collars 100,000 150,000 145,000 125,000 95,000 87,500 68,000 60,000 Cash collections - Percentage % Cash Sales Credit Sales Collected in month of sale Collected in the following month Collected in the 2nd month following sale 20% 80% 30% 50% 20% The following information has been obtained from the production department regarding the upcoming production forecasts for the next six (6) months. The costs are related to budgeted raw materials and labour costs. Budgeted raw materials and labour costs (in dollars) November December January February March April May June Cost information (in dollars) Pet Toys 65,000 85,000 80,000 65,000 72,500 70,000 50,000 41,500 Designer Collars 75,000 105,000 95,000 87,000 85,000 67,500 47,000 48,500