Question

Assume the following data for Animal Gear Company: EClick the icon to view budget intarmation.) iClick the icon to view the assumptions.) Requirements Prepare a cash budget for April for Animal Gear, Why do Animal Gear's managers prepare a cash budget in addition to the revenue, expenses, and operating income budget? 2 Requirement 1. Prepare a cash budget for April for Animal Gear. Begin the y aa e7 000 at i usents, and finally the effects of financing and the ending cash balance. (Round your answers to the nearest whole dollar. Enter "O" for of April) excess cash гераутent Cash Budget April 30 Cash balance, beginning Add receipts Cash sales Credit card sales Total cash available for needs Deduct disbursements Direct materials Direct manufacturing labor Manufacturing overhead Nonmanufacturing salaries Sales commissions Other nonmanufacturing fixed costs Machinery purchase Income taxes Total disbursements Cash excess (deficiency) Financing Repayment of loan Interest loan Total effects af financing Ending cash balance, April 30 Animal Gear (AG) does not make any sales on credit. AG sells only to the public and accepts cash and credit cards; 90% of its sales are to customers using credit cards, for which AG gets the cash right away, less a 2% transaction fee. Purchases of materials are on account. AG pays for half the purchases in the period of the purchase and the other half in the following period. At the end of March, AG owes suppliers $8,000. During April they plan to purchase direct materials worth $20,024 AG plans to replace a machine in April at a net cash cost of $13,000. 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 $25,000 of the manufacturing cost and $10,000 of the nonmanufacturing (fixed) cost for April AG currently has a $2,000 loan at an annual interest rate of 12%. The interest is paid at the end of each month. If AG has more than $7,000 cash at the end of April it will pay back the loan. AG owes $5,000 in income taxes that need to be remitted in April. AG has cash of $5,900 on hand at the end of March Revenue Budget For the Month of April Units Selling price Total Revenues $ 205 $ 108,650 Cat-allac 530 69,750 Dog-eriffic 225 310 178,400 Total Manufacturing Overhead Budget For the Month of April Machine setup costs $ 7,875 Processing costs 101,540 417 Inspection costs $ 109,832 Total Direct Manufacturing Labor Costs Budget For the Month of April Total Hourly Output units DMLH produced Hours Total Wage Rate per unit Cat-allac 10 $ 550 3 1,650 $ 16,500 10,800 Dog-eriffic 10 216 1,080 $ 27,300 Total Nonmanufacturing Costs Budget For the Month of April Salaries $ 16,800 16,000 Other fixed costs 1,784 Sales commissions Ф Total nonmanufacturing costs 34,584

Answer 1

Cash Budget
30-Apr
Cash Balance beginning		$5,900
Add: Receipts
Cash sales (178400*10%)		17840
Credit card sales (178400*90%*98%)		157349
Total cash avaialble		$181,089
Deduct disbursement
Direct Material 8000+(20024*50%)		18012
Direct Manufacturing labor		27300
Manufacturing overhead (109832-25000)		84832
Non manufacturing salaries		16800
Sales commisision		1784
Other Non manufacturing cost (16000-10000)		6000
Machinery Purchase		$13,000
Income tax		$5,000
Total disbursement		172728
Cash excess		$8,361
Financing
Repayment		-2000
Interest on loan		-20
Total effect of financing		-2020
ending cash bal		$6,341
ans 2
Cash budget is prepared to know what budgeted cash would be used to pay
and what cash inflows would be there during the period. It helps us
to know that there would be budgeted cash excess or deficit
and accordingly we can make arrangements. If there is excess than it could
be applied for various activities and if deficit than it needs to be borrowed
If any doubt please comment