please answer correct Q6. Explain the short costs in relation to cash management....
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Q6. Explain the short costs in relation to cash management. A company plans to sell 78,000 units next year. The expected cost of goods is as follows: Cost Per Unit Rs. Raw Material 60 Labour 50 Overheads 40 Selling Price 200 The duration of various stages of operating cycle is expected to be as follows: Raw Materials are expected in stores for an average period of 2 weeks Work in Progress (with 100% material consumption and 50% for labour and overheads) will be in process for just I week Finished Goods are to stay in the warehouse for 3 weeks Customers are granted a credit of 6 weeks Creditors allow credit for 4 weeks 20% of the sales are on cash basis and 10% margin is kept for contingencies. Assuming 52 weeks in a year, work out the working capital requirements of the company
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