Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › working capital requirement
- This topic has 3 replies, 2 voices, and was last updated 3 years ago by John Moffat.
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- June 7, 2021 at 2:53 am #623547
Hello sir,
In BPP study kit the below is the question:
The following data relate to Corn Co, a manufacturing company.
On average:
(a) Accounts receivable take 2.5 months before payment.
(b) Raw materials are in inventory for three months.
(c) Work in progress represents two months’ worth of half produced goods.
(d) Finished goods represents one month’s production.
According to it . WIP shouldnt it be 2/12 why it is 1/12 ?
I just wanted to understand how did they calculate the WIP for materials, labour etc ?June 7, 2021 at 8:32 am #623584I do not have the Study Text (only the Revision Kit) and so I do not have the question.
However from what you have typed I would guess that it is because the WIP is 2 months worth of half produced goods. So 2/12 x 1/2 = 1/12.
June 7, 2021 at 9:46 am #623611Oh we are not suppose to write complete questions here right thats why I didnt pasted the complete question
Isn’t the goods say Raw material in total is 700,000 should be half i.e, 350,000 as they said that half produced goods.
Its a bit tricky language which I am trying to understand here .June 7, 2021 at 3:02 pm #623660Half produced goods will have half the cost of fully produced goods 🙂
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