2A Limited has prepared the cost sheet of their Chemical Product X, which isbeing reproduced below.Elements of costRaw materialsDirect labourOverheadTotal costProfitSelling priceThe company is maintaining the raw materials in stock, on average, onemonth; Finished goods in stock, on average, one month.Credit allowed by suppliers is one month; Credit allowed to debtors is twomonths; Average time-lag in payment of wages is 1.5 weeks and one month inoverhead expenses; one-fourth of the output is sold against cash; cash in handand at bank is desired to be maintained at Rs 3,65,000.You are required to prepare a statement showing the working capital neededto finance a level of activity of 1,04,000 units of production. You may assumethat production is carried on evenly throughout the year, and wages andoverheads accrue similarly. For calculation purposes, 4 weeks may be taken asequivalent to a monthAmount per unitRs 80306017030200

Working capital requirement is the required amount of money which is essential for the company so…

You are required to prepare a statement showing the working capital needed to finance a level of activity of 1,04,000 units of production. You may assume that production is carried on evenly throughout the year, and wages and overheads accrue similarly. For calculation purposes, 4 weeks may be taken as equivalent to a month

You are required to prepare a statement showing the working capital needed to finance a level of activity of 1,04,000 units of production. You may assume that production is carried on evenly throughout the year, and wages and overheads accrue similarly. For calculation purposes, 4 weeks may be taken as equivalent to a month

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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