A proforma cost sheet of a company provides the following data:
Cost (per unit)
Total Cost (per unit)
The following is the additional information available:
Average raw material in stock : One Month
Average materials in process : Half Month
Credit allowed by suppliers : One Month
Credit allowed to debtors : Two Month
Time lag in payment of wages : 10 Days
Overhead : One Month
One fourth of sales are cash basis.
Cash balance in expected to be RO 120,000/-.
(Month = 30 Days)
You are requested to prepare a statement showing the working capital needed to finance a level of activity of 70,000 units of output. You may assume that production is carried on evenly throughout the year and wages and overheads accrue similarly.