Professional Documents
Culture Documents
Requirement
Part-II
Percentage sales method
1. XYZ has achieved a turnover of Rs 85 crores for the accounting year 2007-
08.It is anticipated that the turnover of the company will reach Rs 110 crores
for the year 2008-09.the financial position of the company as on 31st march
2009 as follows
Liabilities Amount(crores) Assets Amount(crores)
Equity share capital 10 Land and building 4
Reserve and surplus 4 Plant & Machinery 5
Secured Loan 5 Inventories 11
Unsecured loan 3 Receivables 7
Sundry Creditors 6 Cash and bank 3
Provision for taxation 2
30 30
30 30
• Estimate the working capital requirement for the year 2009-2010
3. The following are the extracts from the balance sheet of a company as on 31-3-2009.Compute the additional
working capital required by the company for the year ending 31-3-2010.
• Balance sheet (extracts only) as on 31-3-2009(Assets)
•
• 1.Raw Material Stock =
5.Sundry Creditors =
• You may assume that production is carried on evenly throughout the year (52 weeks) and wages and
overheads accrues similarly. All sales are on credit basis only. You may state your assumption, if any.
2. Prepare an estimate of net working capital requirement for the KLM Ltd adding 10% for contingencies from
the information given below.
• Estimated cost per unit of production Rs 180 including raw material Rs.90,direct labor Rs 40 and
overheads(exclusive of depreciation) Rs.50
• Selling price is Rs 250 per unit
• Level of activity per annum 1,06, 000 units
Raw material in stock 4 weeks
Work in progress(assume 50% completion stage) 2 weeks
Finished goods in stock 4 weeks
Credit allowed by suppliers 4 weeks
Credit allowed to debtors 8 weeks
Lag in payment of wages 1.5 weeks
Cash at bank is expected to be Rs 30,000
• You may assume that production is carried on evenly throughout the year (52 weeks) and wages and
overheads accrues similarly. All sales are on credit basis only. You may state your assumption, if any.
3.The board of directors of Ruby ltd. Request you to prepare a statement showing the working capital
requirements forecast for a level of activity of 1,56,0 00 units of production. The following information is
available for your calculation:
(Rs. Per unit)
Raw material 90
Direct Labor 40
Overheads 75
205
Profit 60
• It is to be assumed that all expenses and income were made at even rate for the year.
5.The following information has been extracted from the records of a company: Product cost sheet( per unit)
Raw material 45
Direct labor 20
Overheads 40
Total 105
Profit
Selling Price 120
Direct labor 60
Overheads 120
Profit 60
• Raw material are held in stock on an average for one month. Material are in process on
an average for half-a- month. Finished goods are in stock on an average for one month.
• Credit allowed by suppliers is one month and credit allowed to debtors is 2 months. Time
lag in payment of wages is 1.5 weeks. Time lag in payment of overheads expenses is one
month. One fourth of the sales are made on cash basis.
• Cash in hand and at bank is expected to be Nu.50, 000 and expected level of production
amounts to 1, 04,000 units for a year of 52 weeks.
• You may assume that production is carried on evenly throughout the year and a time
period of 4 weeks is equivalent to a month.
7.You are required to prepare a statement showing the working capital needed to finance a level of
annual activity of 52,000 units of output. The following information’s are available.
Raw materials 8
Direct labor 2
Overheads 6
Total Costs 16
Profit 4
Selling price 20
• Raw materials are in stock, on an average for 4 weeks. Material are in process, on an average for 2
weeks. Finished goods are in stock, on an average for 6 weeks. Credit allowed to customers is for 8
weeks. Credit allowed by suppliers of raw materials is for 4 weeks. Lag in payment of wages is 1.5
weeks. It is necessary to hold cash in hand and at bank amounting to 75,000.It may be noted that
production is carried on evenly during the year and wages and overheads accrue similarly.