COMRADES LTD Comrades Ltd sells sporting equipment - NSC Accounting - Question 2 - 2017 - Paper 1

Using the FIFO method, the cost of sales can be calculated as follows:

• For 125 units sold from opening stock (100 units at R330 and 25 units at R350): 100 x 330 + 25 x 350 + (Remaining 290 units from purchases)

Total Cost of Sales:

$$100 \times R330 + 25 \times R350 + 90 \times R350 + 330 \times R344 = R33,570$$

The stock turnover rate can be calculated using:

$$\text{Stock Turnover Rate} = \frac{\text{Cost of Sales}}{\text{Average Stock}} = \frac{R173,380}{(\frac{(125 + 96)}{2} \text{ (Average Stock)}}) = 4.71\text{ times}$$

To find the missing vests:

Number Missing:

$$\text{Missing} = (160 + 340 - 298 - 186) = 16 \text{ units}$$

Value Missing:

$$\text{Value} = 16 \times R92 = R1,472$$

Gross Profit can be calculated as:

Sales:

$$\text{Sales} = 298 \times R140 = R41,720$$

Cost of Sales:

$$\text{Cost of Sales} = R13,760 + R33,740 + R17,670 = R29,830$$

Gross Profit:

$$\text{Gross Profit} = \text{Sales} - \text{Cost of Sales} = R41,720 - R29,830 = R11,890$$

Problem 1: Days worked were low (172/264). Solution: Investigate reasons for low employee attendance, monitor clock-in procedures, and review time management.

Problem 2: Stock turnover rate is low (2 times). Solution: Implement better inventory management practices, possibly raise prices or reduce stock levels to improve turnover.