S.Y.

BBI SEM IV WORKING CAPITAL

SAMEER KINI SYBBI VIVA COLLEGE Page 1

Q.1 Dilip Ltd furnished the following information and requests you to prepare a statement showing
the requirement of working capital. Production capacity 40,000 units per annum Output and
sales for the year 2005 06, 36,000 units.
Cost Sheet Per Unit (Rs.)
Raw Material
Wages
Overhead
25
16
10
51
Profit 9
Selling Price 60
Additional Information:
(i) Raw Material remains in stock for one months consumption.
(ii) Process period is one month.
(iii) Finished goods remain in stock for two month.
(iv) Credit period allowed by the suppliers of raw material is one months.
(v) 25% of sales will be for cash.
(vi) Credit period allowed to debtors is two months.
(vii) Time lag payment of wages and overheads is one month.
(viii) Cash on Hand and at bank should be Rs.25, 000.

Q.2 A factory produced 96,000 units during the year and selling them @ Rs. 50 per unit. Cost
Structure of a product is as follow:
Raw Materials
Labour
Overhead
60%
15%
10%

Profit
85%
15%
Selling Price 100%

The Following additional information is available:

(i) The activities of purchasing, production and selling occur evenly throughout the year.
(ii) Raw Material equivalent to 1 month supply is stored in godown.
(iii) The production process takes 1 months.
(iv) Finished goods equal to three months production are carried in stock.
(v) Debtors get 2 months credit.
(vi) Creditors allow 1 months credit.
(vii) Time lag payment of wages and overheads is month.
(viii) Cash and bank balance is to be maintained at 10% of the working capital.
(ix) 10% of the sales are made at 10% above the normal selling price.

Draw a forecast of working capital requirement of the factory.

S.Y.BBI SEM IV WORKING CAPITAL

SAMEER KINI SYBBI VIVA COLLEGE Page 2

Q.3 THE PARAS Ltd. had on annual sales of 50,000 units. At Rs.100 per unit.
The Company works for 50 weeks in the year.
The cost details of the company are as given below.
Cost elements Unit Cost Rs.
Raw Materials 30
Labour 10
Overheads 20
60
Profit per unit 40
Selling price per unit 100

The company has the practice of storing raw materials for 4 weeks requirements. Wages and
other expenses are paid after a lag of 2 weeks. Further the debtors enjoy a credit of 10 weeks and
company gets a credit of 4 weeks from suppliers. The processing time is 2 weeks and finished goods
inventors is maintains for 4 weeks. From the above information prepare a working capital Estimate
allowing for a 15% contingency.

Q.4 The Board of Directors of SURAJ LTD. requests you to prepare a statement showing the
requirements of working capital for a forecasted level of activity of 78,000 units in the ensuing year
(52 weeks) from the following information available.
Particulars Unit Rs.
Raw Materials
Wages
Overheads

Profit
Selling Price
18
8
15
41
12
53
Other information:
i) Raw materials remain in stock for four weeks.
ii) Materials remain in process for two weeks.
iii) Finished goods remain in stock on an average 4 weeks.
iv) Credit available from suppliers is four weeks requirements of materials.
v) Time-lag in receipt from Debtors is eight weeks.
vi) Time-lag in payment of wages is one and half weeks.
vii) Payment of overheads time-lag is four weeks.
viii) Cash in hand and with bank should always be Rs. 60,000/-.
ix) Operations are expected to be distributed evenly throughout the year.
x) Of the total sales 20% are expected to be for cash.