3.1 Complete each of the following sentences by filling in the missing word(s) - NSC Accounting - Question 3 - 2022 - Paper 2

The stock system used to record the cost of goods sold at the point of sale is the Perpetual / Continuous system.

The stock valuation method that divides the total cost of goods available for sale by the number of units is the Weighted-average method.

To calculate the value of the closing stock:

1. Start with the total available stock and its cost.

2. Use the formula:

   $\text{Value of Closing Stock} = \text{Total Cost of Stock} \div \text{Total Units}$

   For example, if the total cost is R1,936,000 for 1,712 units, then:

   $\text{Value of Closing Stock} = \frac{R1,936,000}{1,712} \approx R344,960$

Thus, the value of the closing stock of pots is R344,960.

To determine how long it will take to sell the closing stock of pots, we can calculate the average sales per day and then estimate the period:

1. Use the formula:

   $\text{Days to Sell} = \frac{\text{Closing Stock}}{\text{Average Daily Sales}}$

   If the closing stock is 980 units, and average daily sales is estimated at 270 units:

   $\text{Days to Sell} = \frac{980}{270} \approx 3.63\text{ days}$

Thus, it will take approximately 4 days to sell the closing stock.

To calculate the number of pots missing:

1. First, find the expected number of pots from records.
2. Then compare it with the actual number of pots counted (980 units).

If the expected number is 1,270 pots (800 + 470), then:

$\text{Missing Pots} = 1,270 - 980 = 290$

Thus, 290 pots are missing.

To calculate the closing stock for microwave ovens:

1. Calculate the value of each model:

   • For Swift model:

     • Units: 380
     • Cost per unit: R750
     • Total value:

     $\text{Total Swift} = 380 \times 750 = R285,000$

   • For Delta model:

     • Units: 630
     • Cost per unit: R1,500
     • Total value:

     $\text{Total Delta} = 630 \times 1,500 = R945,000$

Finally, add the values:

$\text{Total Closing Stock} = R285,000 + R945,000 = R1,230,000$

Thus, the closing stock for microwave ovens is R1,230,000.

Reasons in favor of discontinuing the Delta model:

1. High Return Rates: The Delta model has a higher risk of poor quality, leading to increased return rates.
2. Cost Issues: Significant costs associated with maintaining stock and sales of the Delta model, with sales lower than expected.

One reason against the decision:

1. Loss of Revenue: By discontinuing, Lerato may lose future revenue from existing customers who prefer the Delta ovens.