Read the case given below and answer the questions given at the end.
CASE STUDY – I
A Performa cost sheet provides the following particulars:
The following further particulars are available:
Raw Material in stock, on average, one month; Material in process ( completion stage 50%), on
average, half a 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 & cash at bank 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 through out the year , and wages and overheads accrue similarly. For calculation purpose , 4 weeks may be taken as equivalent to a month