Question

Requirements 1. Prepare a cash budget for April for Pet Gear. 2. Why do Pet Gear​'s managers prepare a cash budget in addition to the​ revenue, expenses, and operating income​ budget?

times Pet Gear ​(PG​) does not make any sales on credit. PG sells only to the public and accepts cash and credit​ cards; 90% of its sales are to customers using credit​ cards, for which PG gets the cash right​ away, less a 2​% transaction fee. times Purchases of materials are on account. PG pays for half the purchases in the period of the purchase and the other half in the following period. At the end of​ March, PG owes suppliers $ 8,700. During April they plan to purchase direct materials worth $ 21, 130. times PG plans to replace a machine in April at a net cash cost of $ 13,600. times ​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 $ 24, 000 of the manufacturing cost and $ 11,000 of the nonmanufacturing​ (fixed) cost for April. times PG currently has a $ 2,700 loan at an annual interest rate of 12​%. The interest is paid at the end of each month. If PG has more than​ $10,000 cash at the end of April it will pay back the loan. PG owes $ 5 ,900 in income taxes that need to be remitted in April. PG has cash of $ 5, 000 on hand at the end of March.

Revenue Budget

For the Month of April

Units Selling price Total Revenues Cat-allac 530 $205 $108,650 Dog-eriffic 265 310 82,150 Total $190,800 Manufacturing Overhead Budget For the Month of April Machine setup costs $8,715 Processing costs 108,000 Inspection costs 465 Total $117,180 Direct Manufacturing Labor Costs Budget For the Month of April Output units DMLH Total Hourly produced per unit Hours Wage Rate Total Cat-allac 550 3 1,650 $10 $16,500 Dog-eriffic 250 5 1,250 10 12,500 Total $29,000 Nonmanufacturing Costs Budget For the Month of April Salaries $18,800 Other fixed costs 19,000 Sales commissions 1,908 Total nonmanufacturing costs $39,708 Deduct disbursements ▼

ANIMAL GEAR COMPANY

Cash BudgetFor the Month of April

Beginning cash balance

Cash receipts from customers

Total cash available

Cash disbursements:

Payments for purchases

Purchase of machine

Labor costs

Manufacturing overhead costs

Non-manufacturing costs

Interest expense Income

Total cash disbursements

Preliminary cash balance

Repayment of loan

Ending cash balance

Calculations:

Cash receipts from customers

Cash sales Credit card sales

Less: Transaction Fee

Total cash receipts from customers

Cash payments for purchases

Payment of March payables

Payment for April purchases

Total cash payments for purchases $

Answer 1

	November	December	January
Sales	$ 4,12,000.00	$    6,03,000.00	$ 3,40,000.00
Cash Sales	$ 1,10,000.00	$     1,39,000.00	$     92,000.00
Credit Sales	$ 3,02,000.00	$    4,64,000.00	$ 2,48,000.00
Uncollectible Amount @5% of Credit sales	$      15,100.00	$       23,200.00	$     12,400.00
Collectible amount	$ 2,86,900.00	$    4,40,800.00	$ 2,35,600.00
Collections :
65% of Collectible amount in month of sale	$ 1,86,485.00	$    2,86,520.00	$ 1,53,140.00
35% of Collectible amount in following month		$     1,00,415.00	$ 1,54,280.00	$ 82,460.00
Cash sales	$ 1,10,000.00	$     1,39,000.00	$     92,000.00
Total Cash Collections in December		$5,25,935.00