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The management of bixby Food Products Limited has called for a statement showing working capital needed to finance a level of activity of 300000 units of out put for the year
The management of bixby Food Products Limited has called for a statement showing working capital needed to finance a level of activity of 300000 units of out put for the year. The cost structure of the company’s product, for the above activity level is detailed below:
|
Particulars |
Cost per unit |
|
Raw materials |
20 |
|
Manufacturing Expenses |
5 |
|
Other overheads |
15 |
|
Total cost |
40 |
|
Profit |
10 |
|
Selling Price |
50 |
Past trends indicate the following:
- Raw Materials are held in stock for 2 months;
- Work-in-progress will be approximate to half a month’s production;
- Finished goods remain in the warehouse for a month;
- Two months’ credit is normally allowed to customers;
- Manufacturing Expenses are expected to occur evenly during the year.
You are required calculate the investment in various current assets including a cash balance of 5% of Gross Working Capital. Your calculations & answers should be rounded off to Rupees in lakhs.
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