Estimation of current assets, Financial Management

What is Estimation of Current Assets? Please provide me report on Estimation of Current Assets. It is about 2000 words count report on topic Estimation of Current Assets.

Posted Date: 2/14/2013 1:35:09 AM | Location : United States





Estimation of Current Assets

Current assets estimation includes:

  1. Raw materials Requirement cost

This is computed by multiplying the daily requirement by the age of raw materials. Assume if the raw material cost is $5 per unit and the company expects to produce and sell 36000 units in the coming year and the age of raw materials is 45, raw materials requirement cost would be = Daily requirement x Age of raw materials.

Raw Materials requirement cost =    (36000 x $5 x 45) / 365 = $22,192

  1. Work-in-Progress stock requirement cost

This is computed by multiplying the daily requirement of various sub-components of WIP by the age of WIP (Work in progress). Suppose if the Raw material cost is $5 per unit and where as wages is $4 per unit and production overhead is $4 per unit and the age of WIP is 30 days, the WIP (Work in progress) stock requirement cost would be: (36000 units per year)

Raw material component  = 36,000 x $5 x 30 /365   =   $14,795

Wages (Direct labor) Component =  36,000 x $4 x 30 / 365    =   $11,836

Production overhead component = 36,000 x $4 x 30 / 365    =   $11,836

Total WIP requirement cost = $38,467

Posted by Harry | Posted Date: 2/14/2013 1:38:44 AM


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