Q 1 :- following information has been provided by a company for the year ended 30.06.2008.

Liabilities Rs. Assets Rs.

Equity share capital 2,00,000 Fixed assets less Depreciation 3,00,000

8% Debentures 1,00,000 Inventories 1,00,000

Reserves and surpluses 50,000 Sundry Debtors 70,000

Long term Loans 50,000 Cash and bank 10,000

Sundry creditors 80,000

4,80,000 4,80,000

Sales for the year ended 30.06.2008 amounted to Rs. 10,00,000 and it is estimated that same with amount
to Rs. 12,00,000 for the year 2008-09.

You are required to estimate the working Capital requirements for the year 2008-09 assuming a linear
relationship between sales and working capital.

Ques. 2 The following information is available for Shagun Ltd.

Rs’000

Average stock of row material and stores 400

Average work in progress inventory 600

Average finished goods inventory 360

Average accounts receivable 600

Average accounts payable 360

Average raw material and stores purchased on credit and consumed per day 20

Average work in progress value of raw materials committed per day 25

Average cost of goods sold per day 36

Average sales per day 40

YOU ARE REQUIRED TO CALCULATE :-

(a) Duration of raw materials stage

 (b) Duration of work in progress stage

(c) Duration of finished goods stage

(d) Duration of accounts receivable stage

(e) Duration of accounts receivable stage

(f) Duration of operating Cycle.

Ques.:-3 From the following data compute the duration of the operating cycle for each of the two

Companies:

COMPANY A COMPANY B

RS. Rs.

Stocks:

Raw material 20,000 27,000

Work in progress 14,000 18,000

Finished goods 21,000 24,000

Purchase/consumption of raw material 96,000 1,35,000

Cost of goods Purchased/sold 1,40,000 1,18,000

Sales 1,60,00 2,00,000

Debtors 32,000 50,000

Creditors 16,000 18,000

Assume 360 days per year for computational purpose.

Ques: 4 Following information is given about materials.

Annual usage= Rs. 2,00,000

Cost of placing and receiving one order= Rs. 80

Annual carring Cost= Rs. 10% of inventory value

Find out the Economic order Quantity.

Ques: 5 The annual demand for a product is 6,400 units.The unit cost is Rs. 6 and inventory carrying
cost per unit per annum is 25% of average inventory cost. If the cost of procurement is Rs. 75 determine:

(a) Economic order quantity

(b) No of orders per annum

(c) Time between two consecutive orders

Q6. The following information has been provided by a company for the year ended 30.6.08

liabilities Rupees assets Rupees

Equity share capital 2,00,000 Fixed assets less 3,00,000
depreciation
8%debentures 1,00,000 Inventories 1,00,000
Reserves and surplus 50,000 Sundry debtors 70.000
Long term loans 50,000 Cash and bank 10,000
Sundry creditors 80,000
Total=4,80,000 total= 4,80,000

Sales for the year ended 30.6.08 amounted to Rs. 10,00,000 and it is estimated that the same will
amount to Rs.12,00,000 for the year 2008-09

You are required to estimate the working capital requirements for the year 2008-09 assuming a linear
relationship between sales and working capital.

Q7. Gowatham ltd. Produces a product which has a monthly demand of 4,000 units. the product
requires a component x which is purchased at Rs. 20.for every finished product one unit of the
component is required. the ordering cost is Rs.120 per order and the holding cost is 10% p.a

You are required to calculate:

(i) Economic order quantity

(ii) If the minimum lot size to be applied is 4000 units, what is the extra cost, the
company has to incur?

Q8. What do you understand by maximum level, re-ordering level? calculate the above from the
following data:

Re-order quantity 1,500 units

Re-order period 4 to 6 weeks
Maximum consumption 400 units per week
Normal consumption 300 units per week
Minimum consumption 250 units per week
Q9. Two materials x and y are used as follows:

Minimum usage-5o units per week each;

Minimum usage-150 units per week each;

Normal usage-100 units per week each;

Ordering quantity:x-600 units and y-1000 units:

Delivery period:x-4 to 6 weeks;y-2 to 4 weeks.

Calculate for each material:

(a) Minimum level

(b) Maximum level

(c) Ordering level

Q10. Ace ltd. Manufactures a product and the following particulars are collected for the year ended
march,2008:

Monthly demand 1000 units

Cost of placing an order Rs.100
Annual carrying cost Rs. 15 per unit
Normal usage 50 units per week
Minimum usage 25 units per week
Maximum usage 75 units per week
Re-order period 4-6 weeks

You are required to calculate:

(i) Re-order quantity

(ii) Re-order level

(iii) Minimum level

(iv) Maximum level

(v) Average stock level