A Limited has prepared the cost sheet of their Chemical Product X, which is being reproduced...

 

Transcribed Image Text:

A Limited has prepared the cost sheet of their Chemical Product X, which is being reproduced below. Elements of cost Raw materials Direct labour Overhead Amount per unit Rs 80 30 60 170 Total cost Profit Selling price The company is maintaining the raw materials in stock, on average, one month; Finished goods in stock, on average, one month. Credit allowed by suppliers is one month; Credit allowed to debtors is two months; Average time-lag in payment of wages is 1.5 weeks and one month in overhead expenses; one-fourth of the output is sold against cash; cash in hand and at bank is desired to be maintained at Rs 3,65,000. 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, and wages and overheads accrue similarly. For calculation purposes, 4 weeks may be taken as equivalent to a month 30 200 A Limited has prepared the cost sheet of their Chemical Product X, which is being reproduced below. Elements of cost Raw materials Direct labour Overhead Amount per unit Rs 80 30 60 170 Total cost Profit Selling price The company is maintaining the raw materials in stock, on average, one month; Finished goods in stock, on average, one month. Credit allowed by suppliers is one month; Credit allowed to debtors is two months; Average time-lag in payment of wages is 1.5 weeks and one month in overhead expenses; one-fourth of the output is sold against cash; cash in hand and at bank is desired to be maintained at Rs 3,65,000. 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, and wages and overheads accrue similarly. For calculation purposes, 4 weeks may be taken as equivalent to a month 30 200

Answer rating: 100% (QA)

SOLUTION To calculate the working capital needed to finance a level of activity of 104000 units of p... View the full answer