CHAPTER: 4 – CASH MANAGEMENT Q.18) Texas Manufacturing Company - TopicsExpress

CHAPTER: 4 – CASH MANAGEMENT Q.18) Texas Manufacturing Company Ltd. is to start production on 1st January, 2012. The prime cost of a unit is expected to be 40 out of which 16 is for materials and 24 for labour. In addition variable expenses per unit are expected to be 8, and fixed cash expenses per month 30,000. Payment for materials is to be made in the month following the purchase. One-third of sales will be for cash and the rest on credit for settlement in the following month. Expenses are payable in the month in which they are incurred. The selling price is fixed at 80 per unit. The number of units manufactured and sold are expected to be as under: January 900 February 1,200 Draw up a statement showing requirements of cash for a month of February, ignoring the question of stocks. (MU, TYBMS Nov. 2011) Ans: Cash requirement (ii – i) 2800

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