WORKING CAPITAL Q.1) From the following information available to you, on 1st January, prepare the working capital requirement forecast for the year. Production during the previous year was 30,000 units. It is planned that this level of activity should be maintained during the current year. The expected ratios of the cost to selling prices are Raw materials 60%, Direct wages 10% and Overheads 20%. Raw materials are expected to remain in stores for an average of 2 months before issue to production. Each unit of production is expected to be in process for 1 month, the raw materials being fed into the pipeline immediately and the labour and overheads cost accruing evenly during the month. Finished goods will be in the storehouse approximately for 3 months before being dispatched to customers. Creditors allow 2 months credit from the date of delivery of raw materials. Credit allowed to debtors is 3 months from the date of dispatch. Selling price is 10 per unit. The cycle of production and sales is regular. Wages are paid 15 days in arrears. Cash in hand with the company is normally 20,000. Assume 30 days to a month. (MU, BMS, Mar. 2011) Ans :- Estimated of Working Capital = 1,80,000
Posted on: Sat, 27 Jul 2013 04:03:10 +0000
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