Question: You are required to prepare a statement showing the working capital required to finance the level of activity of 1 8 0 0 0 units

You are required to prepare a statement showing the working capital required to finance the level of activity of 18000 units per year from the following information: -
Particulars Rs.
Raw material per unit 12
Direct Labor per Unit 3
Overheads per unit 9
Total Cost per unit 24
Profit per unit 6
Selling price per unit 30
Additional Information:
1. Raw material is in stock on average for 2 months
2. Materials are in process on an average for half a month
3. Finished goods are in stock on an average for two months
4. Credit allowed by creditors is two months in respect of raw materials supplied.
5. Credit allowed to debtors is three months. Debtors are calculated on the selling price.
6. Lag in payment of wages in half a month. Cash on hand and at the bank is expected to be Rs.7000
7. You are informed that all activities are evenly spread out during the year.

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