Ques: The following information has been submitted by a borrower:

I. Expected level of annual production 2,40,000 units

II. Raw Material to remain in stock on an average 2 months
III. Processing period 1 month
IV. Finished goods remain in stock an an average 3 months
V. Credit allowed to the customers from the date of despatch 3 months
VI. Expected ratio of cost to selling price were
a) Raw Material 60%
b) Direct labour wages 10%
c) Overhead 20%
VII. Selling price per unit Rs 20

VIII.Expected margin on sale 10%

a) Sales : 2,40,000 *20=48,00,000

b) Raw material =48,00,000*60/100*1/12=2,40,000
c) Direct labour =48,00,000*10/100*1/12=40,000
d) Ovehead =48,00,000*20/100*1/12=80,000

STATEMENT SHOWING WORKING CAPITAL REQUIREMENTS

PARTICULARS AMOUNT
CURRENT ASSETS:
Raw Material (2,40,000 ×2) 4,80,000
Work –in –Progess (Processing period 1
month)
1. Raw material (2,40,000*1)=2,40,000
2. Direct labour (40,000*1)=40,000 3,60,000
3. Overheads(80,000*1)= 80,000
Finished Goods( Average storage period 3
months)
1. Raw material(2,40,000*3)=7,20,000
2. Direct labour(40,000*3)=1,20,000 10,80,000
3. Overhead(80,000*3)=2,40,000
Debtors (Average collection period 3 months)
1. Raw material (2,40,000*3)
2. Direct labour (40,000*3)
3. Overhead (80,000*3) 10,80,000
Total requirements for working capital 30,00,000