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Problem 5 A proforma cost sheet of a company provides the following particulars: Elements of Cost Amt. Per Unit (Rs.) Raw Materials 140 Direct Labours 60 Overheads 70 Total Cost 270 Profit 30 Selling Price 300 Further particulars available are: Raw materials are in stock on an average for one month. Materials are in process on an average for half a month. Finished goods are in stock on an average for one month. Credit allowed by suppliers is one month- credit allowed to customers is two months. Lag in payment of wages is 1.5 weeks. Lag in payment of overhead expenses is one month. One fourth of the output is sold against cash. Cash in hand and at bank is expected to be Rs. 50,000. You are required to prepare a statement showing the working capital needed to finance, a level of activity of 2,40,000 units of production. You may assume that production is carried on evenly throughout the year; wages and overhead accrue similarly and a time period of 4 weeks is equivalent to a month. Note: Year - 4x12 - 48 weeks

Problem 5 A proforma cost sheet of a company provides the following particulars: Elements of Cost Amt. Per Unit (Rs.) Raw Materials 140 Direct Labours 60 Overheads 70 Total Cost 270 Profit 30 Selling Price 300 Further particulars available are: Raw materials are in stock on an average for one month. Materials are in process on an average for half a month. Finished goods are in stock on an average for one month. Credit allowed by suppliers is one month- credit allowed to customers is two months. Lag in payment of wages is 1.5 weeks. Lag in payment of overhead expenses is one month. One fourth of the output is sold against cash. Cash in hand and at bank is expected to be Rs. 50,000. You are required to prepare a statement showing the working capital needed to finance, a level of activity of 2,40,000 units of production. You may assume that production is carried on evenly throughout the year; wages and overhead accrue similarly and a time period of 4 weeks is equivalent to a month. Note: Year - 4x12 - 48 weeks

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter5: Process Costing
Section: Chapter Questions
Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...
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Problem 5 A proforma cost sheet of a company provides the following particulars: Elements of Cost Amt. Per Unit (Rs.) Raw Materials 140 Direct Labours 60 Overheads Total Cost 70 270 Profit 30 Selling Price 300 Further particulars available are: Raw materials are in stock on an average for one month. Materials are in process on an average for half a month. Finished goods are in stock on an average for one month. Credit allowed by suppliers is one month - credit allowed to customers is two months. Lag in payment of wages is 1.5 weeks. Lag in payment of overhead expenses is one month. One fourth of the output is sold against cash. Cash in hand and at bank is expected to be Rs. 50,000. You are required to prepare a statement showing the working capital needed to finance, a level of activity of 2,40,000 units of production. You may assume that production is carried on evenly throughout the year; wages and overhead accrue similarly and a time period of 4 weeks is equivalent to a month. Note: Year - 4x12 - 48 weeks
Transcribed Image Text:Problem 5 A proforma cost sheet of a company provides the following particulars: Elements of Cost Amt. Per Unit (Rs.) Raw Materials 140 Direct Labours 60 Overheads Total Cost 70 270 Profit 30 Selling Price 300 Further particulars available are: Raw materials are in stock on an average for one month. Materials are in process on an average for half a month. Finished goods are in stock on an average for one month. Credit allowed by suppliers is one month - credit allowed to customers is two months. Lag in payment of wages is 1.5 weeks. Lag in payment of overhead expenses is one month. One fourth of the output is sold against cash. Cash in hand and at bank is expected to be Rs. 50,000. You are required to prepare a statement showing the working capital needed to finance, a level of activity of 2,40,000 units of production. You may assume that production is carried on evenly throughout the year; wages and overhead accrue similarly and a time period of 4 weeks is equivalent to a month. Note: Year - 4x12 - 48 weeks
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