Question

1 From the following information prepare a statement showing the working capital

requirements: Budgeted sales(In Unit) 2,60,000 p.a Analysis of one rupee of sales:

Raw Material 0.30

Direct Labour 0.40

Overheads 0.20

Total cost 0.90

Profit 0.10

Sales 1.00

It is estimated that:

Raw materials are carried in stock for 3 weeks and finished goods for 2 weeks.

Factory processing will take 3 weeks. (Raw material @ 100% & 50% for labour & overheads

Suppliers will give 5 weeks credit.

Customers will require 8 weeks credit.

Wages & overhead to be accrued evenly throughout the year.​

Answer 1

Answer:

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Answer 2

Answer:

Working Capital 44000/-

Explanation:

A. Raw Material = 0.30*260000*(3/52) = 4500/-

B. Work in Progress = (100% of 0.30)*260000*(3/52) = 4500/-

                                 = (50% of (0.40+0.20))*260000*(3/52) = 4500/-

C. Finished Goods = 0.90*260000*(2/52) = 9000/-

D. Debtor = 1*260000*(8/52) = 40000/-

E. Creditor = 0.30*260000*(5/52) = 7500/-

F. Outstanding Wages = 0.40*260000*(1/52) = 2000/-

Therefore, Net Working Capital (A+B+C+D-E-F) = 44000/-