Additional Investments needed if BBS accepts the
proposal:
The incremental working capital can be found as
difference between CA and CL
CA:
Material cost = $ 40
Labour cost = $ 20
Overhead cost = 40 % of 24.50 = $ 10
Total cost = $ 70
BBC will produce 25000 cycles annually for Hi Value ie aprox 2000 cycles per month
Raw material for 2 months = 4000 cycles * $ 40 = 160,000
