Question

Assume the following data for Pet Gear Company:

(the​ assumptions.)

•	Pet Gear ​(PG​) does not make any sales on credit. PG sells only to the​ public, and accepts cash and credit cards. Of its​ sales, 90% are to customers using credit​ cards, for which PG gets the cash right​ away, less a 4​% transaction fee.
•	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 $8,200. During April they plan to purchase direct materials worth $16,300.
•	PG plans to replace a machine in April at a net cash cost of $13,300.
•	​Labour, other production costs and nonproduction costs are paid in cash in the month incurred except of​ course, depreciation, which is not a cash flow. For​ April, $23,000 of the production cost and $10,500 of the nonproduction cost is depreciation.
•	PG currently has a $2,700 loan at an annual interest rate of 24​%. 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 $5,000 in income taxes that need to be remitted in April. PG 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 600 $160 $96,000 Dog-eriffic 340 250 85,000 Total $181,000	Manufacturing Overhead Budget For the Month of April Machine setup costs $7,600 Processing costs 51,000 Inspection costs 400 Total $59,000
Direct Manufacturing Labour Costs Budget For the Month of April Output units DMLH Total Hourly produced per unit Hours Wage Rate Total Cat-allac 620 3 1,860 $12 $22,320 Dog-eriffic 325 5 1,625 12 19,500 Total $41,820	Nonmanufacturing Costs Budget For the Month of April Salaries $18,600 Other fixed costs 18,000 Sales commissions 1,810 Total nonmanufacturing costs $38,410

                                                                            

Requirement

Prepare a cash budget for April for

Pet Gear.

​(Round your answers to the nearest whole​ dollar.)

Begin the cash budget by calculating the cash​ available, then total​ disbursements, and finally the effects of financing and the ending cash balance.

Cash Budget
April 30, 20XX
Cash balance, April 1, 20XX
Add receipts
Total cash available for needs

Answer 1

Pet Gear Limited
Cash Budget for the month of April, 20XX
Particulars	Amount (in $)	Amount (in $)
Opening Cash Balance (Closing balance of March, 20XX) (A)		5100
Sales for the month of April, 20XX
- Cat-allac
Credit Card sales (90% of Total sales less4 % transaction charges)		82944
Cash Sales (10% of Total sales)		9600
- Dog-eriffic
Credit Card sales (90% of Total sales less4 % transaction charges)		73440
Cash Sales (10% of Total sales)		8500
Total Receipts (B)		174484
Purchases of materials
- Cost of material for April (paid 50% in April)		8150
- 50% Cost of material paid for March		8200
Production Cost
Labour Cost
- Cat-allac	22320
- Dog-eriffic	19500
Overheads
Machine setup costs	7600
Processing costs	51000
Inspection costs	400
Less: Depreciation alreadt inlcuded in Production Cost	(23000)	77,820
Non-production Cost
Salaries	18,600
Other fixed costs	18000
Sales commissions	1810
Less : Depreciation alreadt inlcuded in non-production Cost	(10500)	27,910
Cost of replacement of machinery		13300
Finance Cost (2700*24%*1/12)		54
Income-tax		5000
Repayment of Loan		2700
Total Payments (C)		143134
Closing Cash Balance		36450