Question

From the following data provided by M/s. Alpha Ltd. estimate working capital
requirements for the year ended 31st March, 2020.
a) Estimated activity / operations for the year 2,60,000 units (52 weeks).
b) Raw material remains in stock for 2 weeks and production cycle takes 2
weeks.
c) Finished Goods remaining in stock for 2 weeks.
d) 2 weeks credit is allowed by suppliers.
e) 4 weeks credit is allowed to Debtors.
f) Time lag in payment of wages and overheads is 2 weeks each.
g) Cash & Bank Balance to be maintained Rs. 25,000.
h) Selling price per unit is Rs. 15.
i) Analysis of cost per unit as follows.
1. Raw material 33½% of sales.
2. Labour and overheads in the ratio of 6 : 4 per unit.
3. Profit is at Rs. 5 per unit.
Assume that operations are evenly spread throughout the year; Wages and
Overheads accrue similarly. Manufacturing process required feeding of material
fully at the beginning. Degree of work-in-progress is 50%. Debtors are to be
estimated at selling price.

Answer 1

Answer:

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D

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