A company is currently operating at 75% of its capacity producing 60,000 units during the year 2009 at the following cost price structure:
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Raw Materials per unit
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5.00
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Wages per unit
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4.00
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Overheads per unit:
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Variable
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2.00
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Fixed
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2.00
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4.00
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Profit per unit
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2.00
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Selling Price per unit
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15.00
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On 31 December 2009, the company has the following Current Assets and liabilities:
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Stock of Raw Materials - 10,000 units at cost
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50,000
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Stock of WIP - 5,000 units at cost
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45,000
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Stock of Finished Goods - 15,000 units at cost
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1,95,000
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Sundry Debtors
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1,50,000
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Sundry Creditors
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50,000
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Liability for Wages
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20,000
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Liability for Overheads
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10,000
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In view of the increased demand for the product, it has been decided to operate at 90% capacity on and from 01 January 2010 at the same cost price structure, period of block and selling price of 2009.
Calculate the additional Working Capital Requirement for the year 2010.