1. A company has prepared its annual budget, relevant details are given below.

(a) Sales `46.80 lakhs: 78,000 units 25% cash sales and balance on credit

(b) Raw material cost: 60% of sales value

(c) Labour cost: `6 per unit

(d) Variable overheads: `1 per unit

(e) Fixed overheads: `5 lakhs (including

`1,10,000 as depreciation)

(f) Budgeted stock levels:

Raw materials: 3 weeks Work-in-progress: 1 week (Material 100%, Labour and overheads 50%)

Finished goods: 2 weeks

(g) Debtors are allowed credit for 4 weeks.

(h) Creditors allow 4 weeks credit.

(i) Wages are paid bi-weekly, i.e., by the 3rd week and by the 5th week for the 1st and 2nd weeks and the 3rd and 4th weeks, respectively.

(j) Lag in payment of overheads: 2 weeks

(k) Cash-in-hand required: `50,000 Prepare the Working Capital budget for a year for the company, making whatever assumptions that you may find necessary. [1 year = 52 weeks]

[Ans. Raw Material: `1,62,000 Work-in-Progress: `63,000 Finished Goods: `1,44,000 Debtors: `2,70,000 Creditors: `2,16,000 Net Working Capital: `4,37,000]