Question

A proforma cost sheet of a company provides the following particulars: Raw material cost per unit is Rs 80. Direct labour is Rs 30 per unit, overheads is Rs 60 per unit. The total cost is Rs 170 per unit. profit per unit is Rs 30 and selling price is Rs 200 per unit. The following additional information is available: 1.Raw materials are in stock on an average for one month. 2. Materials are in process on an average for half a month. 3. Finished goods are in stock on an average for one month. 4. Credit allowed by suppliers is one month. 5. Credit allowed to customers is two months. 6. Lag in payment of wages is 1 month. 7. Lag in payment of overhead expenses is one month. 8. One-fourth of the output is sold against cash. Cash in hand and at bank is expected to be Rs.25,000. You are required to prepare a statement showing the working capital needed to finance a level of activity of 1,04,000 units of production. You may assume that production is carried on evenly throughout the year, wages and overheads accrue similarly and assume 12 months in a year.​