Zephyr Traders opened on 1 January 2024 and sells portable power systems (PPS) that are used by the public to cope with load-shedding - NSC Accounting - Question 4 - 2024 - Paper 2

To calculate those amounts:

(i) Cash sales for June 2024: Here, we use the formula: $ext{Cash Sales} = ext{Total Sales} imes ext{Cash Sales Percentage}$ = R 950 400 imes 55% = R 1 216 100

(ii) Payments to creditors in June 2024: Based on the information: Total purchases = 70% of sales = 70% of R 1 210 000 = R 847 000

(iii) Hire of delivery vehicle expense for May 2024: Given that expenses increase by 18%, we calculate: Previous expense = R 34 160, New expense = R 34 160 * 1.18 = R 40 000.

The increase in salaries can be calculated as follows:

• Current Salary: R 64 480
• New Salary: R 62 000
• Increase: R 64 480 - R 62 000 = R 2 480

Percent increase: $ext{Percentage Increase} = \frac{\text{Increase}}{\text{Previous Salary}} \times 100$ = \frac{R 2 480}{R 62 000} \times 100 = 4%.

The arrival of the competitor in April 2024 had significant effects:

1. Sales Competition: The number of units sold was 52 units, which is 26% less than the budgeted sales of 200 units. Total sales decreased by R 457 600 (26%) - hence affecting cash flow negatively.

2. Cash Flow Reduction: Actual cash sales were R 577 280, which was less than the budgeted cash sales of R 968 000, reflecting a decrease in customer purchasing behavior attributed to the competitor's presence. Both points show a detrimental impact on sales numbers and cash flow.

Dan's satisfaction regarding the business decisions can be analyzed as follows:

1. Unsatisfactory Sales Figures: The total sales of R 760 320 in April were below the budgeted sales figures of R 871 200. This discrepancy indicates an ineffective strategy against competitors.

2. Increased Costs: The higher expenditures on salaries and property (due to cash flow issues) contradict any growth expectations. The monthly salaries reduced operational cash flow significantly, affecting overall financial standing.

John's Opinion: John expressed satisfaction due to a commission increase from R 320 to R 485 per unit sold, reflecting on higher earnings from his sales achieved in April 2024.

Sally's Opinion: Conversely, Sally was not satisfied as she was moved to a new job, which decreased her commission rate significantly and made her anxious about job security amidst duties intensified by the new role.

To find the total loan amount:

• Loan Challenge: R 13 800 per month for 10 years, calculating the total cost = 120 months x R 13 800. Total Loan Amount = R 1 656 000.

In favour of purchasing:

• Owning the property would eliminate rental costs, allowing Dan to build equity over time.

Against purchasing:

• However, having to manage a mortgage commitment (R 13 800 monthly) could strain cash flow, affecting the operational capacity of Zephyr Traders.