Problem: 1: Find out working capital by operating cycle method, taking 360 days in a year. Sales: Material cost 9,000 units @ $100 each Same is produce and save is selling Labor cost S 50 per unit. S25 per unit Overheads $15 per unit Customers are given 45 days credit and 50 days credit taken from suppliers. Raw materia for 30 days and finished goods for 15 days are kept in stock. Production cycle period is 25 days. Problem: 2: Find out working capital by operating cycle method, taking 360 days in a year Sales: 50,000 units @ $20 each Material cost S 10 per unit. Labor cost $4 per unit Overheads $3.5 per unit Customers are given 45 days credit and 60 days credit taken from suppliers. Raw material for 36 days and finished goods for 15 days are kept in stock. Production cycle period is 18 days. Forecasting of current assets and current liabilities: Problem: 1: Determine the working capital from the following data given below: 1. Production is estimated to be 6,000 units. 2. Cost of the production: Materials 40% Labor 30% Overheads 10% 3. Materials are expected to be remain in the stores for an average one month. 4. Finished goods are likely to be remain in the warehouse for an average two months. 5. Each unit of production should be take average half of the month. 6. 50% sale will be on credit. Customers are allowed two months credit. 7. Credit allowed to suppliers of materials is one month. 8. Lag in payment to wages is one month. 50% overheads consists of salaries to non- production staff 9. Selling price of per unit will be $ 200. 10. Add 20% for contingencies. Problem: 2: From the following data given below determine the working capital 1. Budgeted Sales (S 20 per unit) $ 520,000 per year. 2. Analysis of one dollar sales: Materials 0.30 0.40 Overheads 0.20 Profit 0.10 3. Materials are kept in the stores for 3 weeks. 4. Finished goods are likely to be remain in the warehouse for 2 weeks. 5. Each unit of production should be taking 3 weeks. 6. Suppliers will give 5 weeks credit and customers will require 8 weeks. 7. It may be assumed that wages and overheads accrue evenly throughout of the year. 8. Add S 15.000 for contingencies. Problem: 3: Determine the working capital from the following data given below Production is estimated to be 31,200 units. 1. Cost of the production per units: Materials $45 Labor $20 Overheads $37.5 2. Raw Materials are expected to be remain in the stores for an average one month. 3. Finished goods are likely to be remain in the warehouse for an average one months. 4. Each unit of production should be take average half of the month. 5. Customers are allowed two months credit. 6. Credit allowed to suppliers of materials is one month. 7. Lag in payment to wages is half month. 8. Leg in payment of overheads is one month. 9. Cash available S 60.000. 10. 50 % of the production is sold against cash and 20% Raw material purchase against cash. Add 25% for contingencies
