SOLUTION: XYZ Ltd. plans to sell 30,000 units next year. The expected cost of goods sold is as follows: (Rs. per unit) Raw material Manufacturing expenses Selling, administratio

Question 300729: XYZ Ltd. plans to sell 30,000 units next year. The expected cost of goods sold is as follows:
(Rs. per unit)
Raw material
Manufacturing expenses
Selling, administration & financial Exp.
Selling price 100
30
20
200
The duration at various stages of the operating cycle is expected to be as follows:
Raw materials stage
Work-in-process stage
Finished goods stage
Debtors stage 2 months
1 month
� month
1 month

You are required to:
(i) calculate the investment in various current assets, and
(ii) estimate the gross working capital requirement if the desired cash balance is 5% of the gross working capital requirements.
Assume the monthly sales level of 2,500 units.

Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
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