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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Cost Sheet of Picon Sales Corporation provides the following information: Cost per Particulars unit (Rs.) Raw Material 250 Direct Labour 400 Overheads (including 100 Depreciation Rs. 50/-) Total Cost 750 Profits 250 Selling Price 1000 Avg. raw material stock is of one month. Avg. work in progress is for half month. Credit period allowed by suppliers is one month and to customers is also one month. Avg. time lag in payment of wages is 10 days and overheads is 30 days. 25% of the sales are on cash basis. Finished goods lie in stock for one month. Cash balance at the beginning is expected to be Rs. 200,000. You are required to prepared a statement of the working capital needed to finance a level of the activity of 54,000 units of output. Production is carried out evenly throughout the year and wages and overheads accrue similarly. Please state your assumptions, if any.
Transcribed Image Text:The Cost Sheet of Picon Sales Corporation provides the following information: Cost per Particulars unit (Rs.) Raw Material 250 Direct Labour 400 Overheads (including 100 Depreciation Rs. 50/-) Total Cost 750 Profits 250 Selling Price 1000 Avg. raw material stock is of one month. Avg. work in progress is for half month. Credit period allowed by suppliers is one month and to customers is also one month. Avg. time lag in payment of wages is 10 days and overheads is 30 days. 25% of the sales are on cash basis. Finished goods lie in stock for one month. Cash balance at the beginning is expected to be Rs. 200,000. You are required to prepared a statement of the working capital needed to finance a level of the activity of 54,000 units of output. Production is carried out evenly throughout the year and wages and overheads accrue similarly. Please state your assumptions, if any.
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