A. Current Assets: Rs. Rs. 1) Raw materials in stock (1,04,000x80x4752 6,40,000 ii) Work-in-progress: a) Raw materials (1,04,000*80*2752 3,20,000 b) Direct Labour 50% of (1.04.000*30*2y52 60.000 c) Overheads 50% of (1,04,000x60x2y52 1,20,000 ii) Finished Good Stock (1,04,000x170x4752 13,60,000 iv) Debtors (1,04,000170x8y52 27,20,000 v) Cash at Bank 25.000 Total Current Assets 52,45,000 B. Current Liabilities: i) Creditors (1,04,000x80x4752 6,40,000 i) Wages (Lag-in-payment): (1.04.000*30*17452 90.000 Total current liabilities: 7,30,000 Net Working Capital (CA-CL) 45. 15,000 + 10% Contingencies 4.51.500 Working Capital Requirement 49.66.500 Assumptions: Net working capital requirement has been estimated on cash cost basis. Hence, investment in debtor has been computed on cash cost. Illustration 13 Gulfam Ltd. is presently operating on single shift basis and has the following cost structure (per unit): Selling Price Rs. 36 Raw Materials Rs. 12 Wages (60% Variable) Rs. 10 Overheads (20% Variable) Rs. 10 u16 Rs. 32 For the year ending March, 31, 2009; the sales amounted to Rs. 8,64,000 and the current asset position on that day was as follows: Raw material Rs. 72,000 Finished Goods 1.44.000 Working in progress (Prime Cost) 44,000 Debtors 2,16,000 At present the company receives a credit of 2 months from the Supplier of raw materials and Wages & expenses are payable with a time lag of half a month. In order to meet the extra demand, the company is preparing to work in double shift. The increase production will enable the firm to get a 10% discount from the supplier of raw materials. There will not be any change in fixed cost, credit policy etc. Ascertain the effect on requirement for working capital if the proposal of double shift materializes