ASSIGNMENT 1 (DUE DATE 16/10/2020) Chansa Ltd makes and sells pet care products. The following projected data for the next year is available. Sales K2,200,000 Costs as percentage of sales Raw materials 15% 20% Direct labour 11% Variable production overheads 10% Fixed production overheads Other costs 12% Working capital statistics Average raw material holding period 4 weeks Average Work-in-progress (WIP) holding period 2 weeks Average finished goods holding period 4 weeks Average debtors' collection period 6 weeks Average creditors' payment period on: Raw materials 4 weeks Direct labour 1 week Variable production overheads 8 weeks Fixed production overheads 5 weeks Other costs 12 weeks Other relevant information - All finished goods stock and WIP values include raw materials, direct labour, variable production overheads and apportioned fixed production overhead costs. Other relevant information - All finished goods stock and WIP values include raw materials, direct labour, variable production overheads and apportioned fixed production overhead costs. - Assume WIP is 75% complete as to materials and 50% complete as to direct labour, variable production overheads and fixed production overheads. - Assume there are 52 weeks in one year. - Assume that production and sales volumes are the same. Required: Calculate the estimated average working capital required by Chansa Ltd for the year, showing clearly all necessary workings. [25 Marks] NOTE: All workings should be in K. ASSIGNMENT 1 (DUE DATE 16/10/2020) Chansa Ltd makes and sells pet care products. The following projected data for the next year is available. Sales K2,200,000 Costs as percentage of sales Raw materials 15% 20% Direct labour 11% Variable production overheads 10% Fixed production overheads Other costs 12% Working capital statistics Average raw material holding period 4 weeks Average Work-in-progress (WIP) holding period 2 weeks Average finished goods holding period 4 weeks Average debtors' collection period 6 weeks Average creditors' payment period on: Raw materials 4 weeks Direct labour 1 week Variable production overheads 8 weeks Fixed production overheads 5 weeks Other costs 12 weeks Other relevant information - All finished goods stock and WIP values include raw materials, direct labour, variable production overheads and apportioned fixed production overhead costs. Other relevant information - All finished goods stock and WIP values include raw materials, direct labour, variable production overheads and apportioned fixed production overhead costs. - Assume WIP is 75% complete as to materials and 50% complete as to direct labour, variable production overheads and fixed production overheads. - Assume there are 52 weeks in one year. - Assume that production and sales volumes are the same. Required: Calculate the estimated average working capital required by Chansa Ltd for the year, showing clearly all necessary workings. [25 Marks] NOTE: All workings should be in K
