The management of Akij Ceramics Limited has called for a statement showing the WC needed to...

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The management of Akij Ceramics Limited has called for a statement showing the WC needed to finance a level of activity of 5,00,000 units of output per year. The cost statement of the company's product, for the above-mentioned activity level, is given below: Direct material Direct labor Overhead Total cost Target profit Target selling price. Cost per unit TK 25 15 20 60 15 TK 75 1. Past records show that raw materials are held in stock, on an average, for two (2) months; 2. Work in process (WIP) will approximate to one (1) month production, 3. Finished goods remain in warehouse on average for three (3) month; 4. Suppliers for materials extend Six (6) month's credit; 5. Two months credit is normally allowed to customers (assume all sales are on credit) 6. A minimum cash balance of TK10,00,000 is expected to be maintained, 7. The production pattern is assumed to be even during the year. A. Prepare a Statement of Working Capital Requirements The management of Akij Ceramics Limited has called for a statement showing the WC needed to finance a level of activity of 5,00,000 units of output per year. The cost statement of the company's product, for the above-mentioned activity level, is given below: Direct material Direct labor Overhead Total cost Target profit Target selling price. Cost per unit TK 25 15 20 60 15 TK 75 1. Past records show that raw materials are held in stock, on an average, for two (2) months; 2. Work in process (WIP) will approximate to one (1) month production, 3. Finished goods remain in warehouse on average for three (3) month; 4. Suppliers for materials extend Six (6) month's credit; 5. Two months credit is normally allowed to customers (assume all sales are on credit) 6. A minimum cash balance of TK10,00,000 is expected to be maintained, 7. The production pattern is assumed to be even during the year. A. Prepare a Statement of Working Capital Requirements

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