The Production of ABC Ltd., during the previous year was 1000000 units. The same level of activity is intended to be maintained during the current year also. The expected ratios of cost to selling price are: Raw material

The Production of ABC Ltd., during the previous year was 1000000 units. The same level of activity is intended to be maintained during the current year also. The expected ratios of cost to selling price are: Raw material 40%, Direct Wages 20%, Overheads 20%. The raw materials ordinarily remain in stores for 3 months before production. Every unit of production remains in the process for 2 months and is assumed to be consisting of 100% raw material, wages and overheads. Finished goods remain in the warehouse for 3 months. Credit allowed by creditors is 4 months from the date of the delivery of raw material and credit given to debtors is 3 months from the date of dispatch. The estimated balance of cash is to be held ₹2,00,000. Lag in payment of wages 1/2 month. Lag in payment of expenses 1/2 month. Selling price is ₹8 per unit. Both production and sales are in a regular cycle. Company makes a provision of 10% for contingency (except cash). Prepare a working capital forecast from the above information.