49. Foods Ltd. is presently operating at 60% level producing 36,000 packetsof snack foods and proposes to increase capacity utilization in the coming yearby 33 1/3 percent over the existing level of production.The following data has been supplied:i)unit cost of the product at current level :Raw material4Wages (variable)2Overheads2(variable)Fixed overhead1profitselling price12ii)Raw material will remain in stores for 1 month before being issuedfor production. Material will remain in process for further 1 month.Suppliers grant 3 months credit to the company.iii)Finished goods remain in warehouse for 1 monthiv)Debtors are allowed credit for 2 months.v)Lag in wages and overhead payments is 1 month and theseexpenses accrue evenly throughout the production cycle.vi)No increase either in cost of inputs or selling price is envisaged.Prepare working capital requirement at the new level, assuming that aminimum cash balance of Rs. 19,500 has to be maintained.

Working Capital is the excess of current assets over current liabilities. It represents the amount…

Answered: Prepare working capital requirement at…

Prepare working capital requirement at the new level, assuming that a minimum cash balance of Rs. 19,500 has to be maintained.

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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