The financial record of a manufacturing company has provided the following cost data: |Working Capital|

Year of Exam- 2011

Question Paper -1

Question number-8-a

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QUESTION

Additional Information-

• The average storage period for Raw Material is one month.
• Production cycle lasts for 1/2 month.
• Average storage period for finished goods is one month. 
• Company sells goods on 2month credit whereas it avails only one month’s credit facility. 80% of the stock is sold for credit.
• Time lag for payment of wages is 1/2 month and for payment of overheads the time lag is one month.
• Cash is expected to remain at ₹20,000

The company proposes to manufacture 2000units for the next year and asks you to determine working capital needs for this level of output. Calculate it.