Manjeet & Daughters Ltd$.$ is launching a new project for the manufacture of a unique component.

At full capacity of $24,000$ units, the cost per unit will be as follows:

Material

Labour and variable expenses

$80$

Fixed manufacturing and administrative expenses

Depreciation

$40$

$20$

The selling price per unit is expected at $200$ and the selling expenses per unit will be $10,$ eighty

per cent variable. In the first two years, production and sales are expected to be:

Year

Production units

$15,000$

$20,000$

Sales units

$14,000$

$18,000$

$To$ assess the working capital requirement, the following additional information $is$ given: $14,000$

$a$

b$)$ Stock of raw material $-3$ month's average consumption

b$)$ Debtors $-1-$month average cost of sales

c$)$ Creditors for the supply of materials $-2$ months average purchases of the year

d$)$ Creditors for expenses $-1-$month average of all expenses during the year

e$)$ Minimum desired cash balance $-20,000$

You are required to pred goods is taken at average cost.