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Donald May owns Breezy Traders that sell air-conditioner units - NSC Accounting - Question 6 - 2018 - Paper 1
Question 6
Donald May owns Breezy Traders that sell air-conditioner units. The budget period ends on 31 October 2018. 6.1 Complete the Debtors' Collection Schedule for October... show full transcript
Worked Solution & Example Answer:Donald May owns Breezy Traders that sell air-conditioner units - NSC Accounting - Question 6 - 2018 - Paper 1
Step 1
Complete the Debtors' Collection Schedule for October 2018.
Answer
6.4.1 The effect of the new competitor on any TWO items is evident:
- Total sales: Decreased from R1,008,000 to R840,000 (R168,000 reduction).
- Cash sales: Reduced from R604,800 to R336,000 due to competition affecting customer flow.
6.4.2 Two changes implemented by Donald in October:
- Decrease in cash purchases from R630,000 to R252,000 to manage resources effectively.
- Increased delivery costs to R67,200 for better distribution efficiency.
6.4.3 Reasons for success:
- Sales of air-conditioners exceeded budget by 50 units (300 – 250 units).
- Cash surpluses exceeded expectations from R480,000 to R621,000, thus maintaining liquidity effectively.