The Board of Directors of Nanak Engineering Company Private Ltd. requests you to prepare a statement showing the Working Capital Requirements for a level of activity of 1,56,000 units of production. The following information is available for your calculations : (a) Raw materials Direct labour Overheads Per unit ? 90 40 75 205 60 265 (b) (i) (ii) Profit Selling price per unit Raw materials are in stock, on average one month. Materials are in process, on average 2 weeks. (iii) Finished goods are in stock, on average one month. (iv) Credit allowed by suppliers, one month. (v) Time lag in payment from debtors, 2 months. (vi) Lag in payment of wages, 12 weeks. (vii) Lag in payment of overheads is one month. 20% of the output is sold against cash. Cash in hand and at bank is expected to be 60,000. It is to be assumed that production is carried on evenly throughout the year, wages and overheads accrue similarly and a time period of 4 weeks is equivalent to a month.

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