On 1st January, the Managing Director of Naureen Ltd. wishes to know the amount of working capital that will be required during the year. From the following information PREPARE the statement of working capital requirements forecast.

Production during the previous year was 60,000 units. It is planned that this level of activity would be maintained during the present year.

The expected ratios of the cost to selling prices are Raw materials 60%, Direct wages 10% and Overheads 20%.

Raw materials are expected to remain in store for an average of 2 months before issue to production.

Each unit is expected to be in process for one month, the raw materials being fed into the pipeline immediately and the labour and overhead costs accruing evenly during the month.

Finished goods will stay in the warehouse awaiting dispatch to customers for approximately 3 months.

Credit allowed by creditors is 2 months from the date of delivery of raw material.

Credit allowed to debtors is 3 months from the date of dispatch. Selling price is INR. 5 per unit.

There is a regular production and sales cycle.

Wages and overheads are paid on the 1st of each month for the previous month.

The company normally keeps cash in hand to the extent of INR. 20,000.

Based on the above information and prepared working capital statement, answer the below mentioned questions

Q1) As per the Statement of Working Capital, what is the value of Raw material inventory?

a.

35,000

b.

30,000

c.

45,000

d.

42,000

Q2) As per the Statement of Working Capital, what is the amount of Total work-in-process?

a.

18,750

b.

17,550

c.

19,000

d.

20,300

Q3) As per the Statement of Working Capital, what is the amount of Finished goods Inventory?

a.

66,000

b.

65,750

c.

65,000

d.

67,500

Q4) As per the Statement of Working Capital, what is the value of Creditors?

a.

33,000

b.

32,000

c.

30,000

d.

31,000

Q5) As per the Statement of Working Capital, what is Estimated working capital requirements?

a.

166,250

b.

150,500

c.

155,700

d.

160,300