Calculate the additional working capital requirement

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Reference no: EM13181809

A company is currently operating at 75% of its capacity producing 60,000 units during the year 2009 at the following cost price structure:


Raw Materials per unit		5.00
Wages per unit		4.00
Overheads per unit:
Variable	2.00
Fixed	2.00	4.00
Profit per unit		2.00
Selling Price per unit		15.00

On 31 December 2009, the company has the following Current Assets and liabilities:


Stock of Raw Materials - 10,000 units at cost	50,000
Stock of WIP - 5,000 units at cost	45,000
Stock of Finished Goods - 15,000 units at cost	1,95,000
Sundry Debtors	1,50,000
Sundry Creditors	50,000
Liability for Wages	20,000
Liability for Overheads	10,000

In view of the increased demand for the product, it has been decided to operate at 90% capacity on and from 01 January 2010 at the same cost price structure, period of block and selling price of 2009.

Calculate the additional Working Capital Requirement for the year 2010.

Reference no: EM13181809

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