Question

Pet Transport does not make any sales on credit. PT sells only to the public and accepts cash and credit cards. Of its sales, 90% are to customers using credit cards, for which PTP gets the cash right away, less a 3% transaction fee.

Purchases of materials are on account. PT pays for half the purchases in the period of the purchase, and the other half in the following period. At the end of March, PT owes suppliers $8,500. During April they plan to purchase direct materials worth $ 17,300.

PT plans to replace a machine in April at a net cash cost of $13,700.

Labour, other production costs and nonproduction costs are paid in cash in the month incurred except, of course, amortization, which is not a cash flow. For? April, $20,000 of the production cost and $10,000 of the nonproduction cost is amortization.

PT currently has a $2,000 loan at an annual interest rate of 12%. The interest is paid at the end of each month. If PT has more than $10,000 cash at the end of April it will pay back the loan. PT owes $5,000 in income taxes that need to be remitted in April. PT has cash of $5,360 on hand at the end of March.

Revenue Budget For the Month of April

	Units	Selling price	Total Revenues
Cat-allac	500	$160	$80,000
Dog-eriffic	300	250	75,000
Total			$155,000

Direct Manufacturing Labour 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	285	5	1,425	101	4,250
Total					$29,850

Manufacturing Overhead Budget For the Month of April

Machine setup costs	$7,225
Processing costs	51,650
Inspection costs	390
Total	$59,265

Nonmanufacturing Costs Budget For the Month of April

Salaries	$18,900
Other fixed costs	18,000
Sales commissions	1,550
Total nonmanufacturing costs	$38,45

Requirement

Prepare a cash budget for April for Pet Transport.

Answer 1