Answer:
Statement showing Working Capital Requirement | |
Particulars | Amount(Rs) |
A. Current assets | |
1. Stock of Raw materials for 4 weeks (260,000*Rs.100*4/52) | 2,000,000 |
2. Work-in-progress for 2 weeks: | 1,400,000 |
a. Material (260,000*Rs.100*2/52*100%) = 1,000,000 | |
b. Labour (260,000*Rs.50*2/52*50%) = 250,000 | |
c. Overheads (260,000*Rs.30*2/52*50%) = 150,000 | |
3. Finished goods for 6 weeks (260,000*Rs.190*6/52) | 5,700,000 |
4. Debtors for 8 weeks (260,000*Rs.250*8/52) | 10,000,000 |
5. Cash in hand and bank | 50,000 |
Total (A) | 19,150,000 |
B. Current liabilities | |
1. Creditors 5 week's purchase of raw materials (260,000*Rs.100*5/52) | 2,500,000 |
2. Labour (260,000*Rs.50*1.5/52) | 375,000 |
3. Overheads (260,000*Rs.30*1/52) | 150,000 |
Total (B) | 3,025,000 |
Working capital (A-B) | 16,125,000 |
Add: Contingencies (16,125,000*5%) | 806,250 |
Total Requirement for Working Capital | 16,931,250 |
NOTES:
a.) Overheads cost is to be taken excluding non-cash expense i.e. deprectiation (40 - 10 = 30).
b.) One year = 52 weeks
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