You are provided with information relating to Hot-Wheels (Pty) Ltd for the three months ending 30 September 2017 - NSC Accounting - Question 5 - 2017 - Paper 1

1. Adjust Pricing to Increase Sales: Advise Mike to consider lowering the price of Model 2. This could help stimulate sales, as a competitive pricing strategy often increases demand and can help reduce excess stock.

2. Evaluate Product Variety: Suggest that Mike evaluate the performance of the different models (Model 1, Model 2, and Model 3). If one model is consistently underperforming, he might consider discontinuing it or replacing it with models that are more popular, as this could enhance overall sales for the business.

Using the weighted-average method:

Total items = 54 (stock total) Average cost calculation = Total value / Total items:

For example:

• Calculate total value:
  • For 15 000 with 39 300 for 6.25 = 601

Average Cost = rac{(15 000 + 39 300)}{54} = 601

Thus, the closing stock on 30 September 2017 using the weighted-average method is R6 201.12 rounded to R6 201.

The weighted-average method may not be entirely appropriate for helmets because:

• Limited Demand Variation: Helmets may have fluctuating demand based on seasonal factors or customer preferences. Some are preferred over others, impacting stock valuation and pricing strategies, suggesting Mike might need a more tailored approach than a simple average.

To verify the suspicion:

Assume:

• Initial helmets in stock = 30
• Received = 75
• Sold = 5

Formula to verify: Stock Calculation: $30 + 75 - 5 = 100$

Remaining helmets should be: If any are missing after the calculation, it indicates theft.

Thus, there are 3 helmets missing.