Calculate the Working Capital requirement for a manufacturing Firm

Calculate the Working Capital requirement for a manufacturing Firm for the Level of activity of 80,000 Units. You may assume that production is carried on evenly throughout the year and Wages & Overhead expenses accrue similarly and a time period of 4 weeks is equivalent to a month.

Description Amount (Rs.) Other Information

(Per Unit)

Raw materials 45 • Raw materials in stock: Two weeks

• Materials in Process: One week

• Finished Goods in stock: Two weeks

• Credit allowed by Suppliers: Half Month.

• Credit allowed to Customers: 4 weeks.

• Overheads Two weeks

Direct labor 20

Overheads 37.5

Total Cost 102.5

Profit 22.5

Selling price 125

Cask at Bank is expected to be Rs. 40,000. Also 80% of the sales are credit sales for the firm. Any other data if required may be assumed.