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4.1 Choose the correct cost concepts from those given in brackets - NSC Accounting - Question 4 - 2023 - Paper 2
Question 4
4.1 Choose the correct cost concepts from those given in brackets. Write only the word(s) next to the question numbers (4.1.1 to 4.1.3) in the ANSWER BOOK. 4.1.1 Th... show full transcript
Worked Solution & Example Answer:4.1 Choose the correct cost concepts from those given in brackets - NSC Accounting - Question 4 - 2023 - Paper 2
Step 1
4.2.1 Calculate the value of the closing stock on 28 February 2023.
Answer
To calculate the value of the closing stock:
-
Hawi Closing Stock:
- Units sold: 300
- Initial units purchased: 90
- Purchases: 835 units, total stock = 90 + 835 - 300 = 625 units remain
- Cost per unit: R3,800
- Total value: 325 x R3,800 = R1,235,000
-
Yama Closing Stock:
- Units sold: 430
- Initial units purchased: 495
- Total stock remaining: 495 - 430 = 65 units remain
- Cost per unit: R5,410
- Total value: 65 x R5,410 = R351,650
-
Closing Stock Value:
- Total closing stock = R1,235,000 + R351,650 = R1,586,650.
Step 2
4.2.2 Calculate how long (in days) it will take to sell the closing stock of the Hawi printers.
Answer
To calculate the time taken to sell:
-
Total closing stock of Hawi: 625 units
-
Daily sales rate = Total sales over the period / Number of days
Daily rate = 300 units sold / 60 days = 5 units/day
Days to sell = Total closing stock / Daily sales rate = 625 units / 5 units/day = 125 days.
Step 3
4.2.3 Explain whether Sipho should be concerned about the stockholding periods of the Hawi and Yama printers.
Answer
Sipho should be concerned about the stockholding periods:
- Hawi Stockholding Period: 152.1 days (more than 3 months) implies slow sales or overstocking.
- Yama Stockholding Period: 55.2 days (less than 2 months) indicates better demand.
For effective stock management, high stockholding periods in Hawi should prompt Sipho to consider strategies to reduce excess stock or improve sales (e.g., promotions or discounts).
Step 4
Step 5
4.3.2 Explain to the bookkeeper why his method is incorrect.
Answer
The bookkeeper's calculation is incorrect because:
- The asset is almost fully depreciated, meaning it should not be fully capitalized.
- The correct approach would consider retaining a minimum value.
Calculation supports explanation:
- If the book value is R75,000, retaining at least R1,000 would avoid a negative carrying value.
Step 6
4.3.3 Explain TWO possible arguments that the CEO can use to support his decision.
Answer
Two arguments the CEO can use are:
- Community Support: Donating computers supports the local school and builds community goodwill, which can enhance the company's reputation.
- CSR and Promotion: The donation may contribute positively to corporate social responsibility goals, improving brand image and potentially attracting customers interested in socially responsible businesses.