Question

4. The cost sheet of a company provides the following particulars.
Elements of Cost
Amount per unit
Raw Labour
50
Direct Labour
20
Overheads
10
Total cost
80
Profit20
Selling price
100
The following particulars are available :
Raw material in stock, on average
one month
(ii) materials in process, on average
one month
(iii) Finished goods in stock, on average
one month
(iv) Credit allowed to debtors is
one month
(v) Credit allowed to debtors is
one month
(vi) Lag in payment of wages is
two weeks
One fourth of the output is sold against cash. Cash in hand and banks are
expected to be * 20,000. Prepare a statement showing the working capital
needed to finance a level of activity of 1,30,000 units of production per annum.
Assume that year consists of 52 weeks and a month consists of 4 weeks.
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Answer 1

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