Raw material in stock

Raw material in stock CAST STUDY  solution

CASE STUDY - 1
A proforma cost sheet of a company provides the following particulars:

The following particulars are available:

Raw material in stock, on average one month; material in process, 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, lag in payment of wages is one and a half weeks, lag in payment of overhead expenses is one month; one fourth of the output is sold against cash; cash at bank is expected to be Rs 25000. 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. Assume that production is carried out during the year evenly.