Zebra Enterprises is in the business of manufacturing iron buckets. The firm is headquatered in Gurgaon and supplies materials across India. The selling price of each bucket is Rs 130. The cost per bucket is 110.5 (which includes Raw material = Rs 52, Direct labor = Rs19.5, Overheads= Rs39). Average raw material in stock for 30 days, average materials in process is 15days, finished goods lie in the stock for 30 days before being sold. Credit allowed by suppliers of raw materials is 30 days and the credit allowed to debtors is 60 days. Time lag in the payment of wages is 10 days and for overheads is 30 days. 25% of the sales are on cash basis. Cash balance is expected to be Rs1,20,000. Estimate the Working Capital required for a level of activity of 70000 units of output annually. Assume production is carried out evenly during the year and there are 360 days in the year.

Zebra Enterprises is in the business of manufacturing iron buckets. The firm is headquatered in Gurgaon and supplies materials across India. The selling price of each bucket is Rs 130. The cost per bucket is 110.5 (which includes Raw material = Rs 52, Direct labor = Rs19.5, Overheads= Rs39). Average raw material in stock for 30 days, average materials in process is 15days, finished goods lie in the stock for 30 days before being sold. Credit allowed by suppliers of raw materials is 30 days and the credit allowed to debtors is 60 days. Time lag in the payment of wages is 10 days and for overheads is 30 days. 25% of the sales are on cash basis. Cash balance is expected to be Rs1,20,000. Estimate the Working Capital required for a level of activity of 70000 units of output annually. Assume production is carried out evenly during the year and there are 360 days in the year.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 6PA: Box Springs, Inc., makes two sizes of box springs: twin and double. The direct material for the twin...

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