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WCM 14
WCM 14
75% of the output is sold on credit basis. Cash on hand and at bank is expected to be Rs.5000.
You are required to prepare a statement in columnar form showing the working capital
requirements (a) in total and (b) as regards each constituent part of the same to finance a level of
activity of 1,04,00 units of production per annum. You may assume that all wages and overheads
accrue evenly and are completely introduced for half the processing time i.e.,1 week.
Total CA
(A)
B.Current
Liabiities:
Creditors
Lag in
payment:
Wages
Overheads
2. Texas manufacturing company Ltd is to start production on 1 st Jan. The prime cost of a
unit is ecpected to be Rs.40 out of which Rs.16 is for materials and Rs.24 for labour. In
addition, variable expenses per unit are expected to be Rs.8 and fixed expenses per month
Rs.30000. payment for materials is to be made in the month following the purchases. One
third of sales will be for cash and the rest on credit for settlement in the following month.
Expenses are payable in the month in which they are incurred. The selling price is fixed
at Rs.80 per unit. The number of units manufactured and sold are expected to be as under:
Jan 900
Feb 1200
Mar 1800
Apr 2100
May 2100
June 2400
3. Mr.Krishnan wishes to commence a new trading business and gives the following
information:
The total estimated sales in a year will be Rs.12,00,000
His expenses are estimated as fixed expenses of Rs.2000 per month plus variable
expenses equal to 5% of his turnover.
His expenses to fix a sales price for each product which will be 25% in excess of his cost
of purchases
He expects to turnover his stock four times in a year
The sales and purchases will be evenly spread throughout the year. All sales will be for
cash but he expects one months credit for purchases .
Calculate :
Hiss estimated profit for the year
His average working capital requirements.