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Choose the stock system/method from the list provided, that is best described by each of the statements below - NSC Accounting - Question 2 - 2017 - Paper 1

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Choose the stock system/method from the list provided, that is best described by each of the statements below. Write the stock system/method next to each number (2.1... show full transcript

Worked Solution & Example Answer:Choose the stock system/method from the list provided, that is best described by each of the statements below - NSC Accounting - Question 2 - 2017 - Paper 1

Step 1

2.2.1 Calculate the selling price per unit for tracksuits.

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Answer

To calculate the selling price per unit for tracksuits, we can use the total sales revenue and divide it by the number of units sold:

extSellingPriceperunit=R296×125515=R575 ext{Selling Price per unit} = \frac{R 296 \times 125}{515} = R 575

Step 2

2.2.2 Calculate the cost of sales of tracksuits using the FIFO method.

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Answer

Using the FIFO method, the cost of sales for tracksuits is calculated as follows:

  1. From the June 2016 purchases:

    • 100 units at R 330 each = R 33,000

  2. From the August 2016 purchases:

    • 90 units at R 350 each = R 31,500

  3. From the November 2016 purchases:

    • 90 units at R 340 each = R 30,600

Total Cost of Sales:

R33,570+R31,500+R30,600=R95,670R 33,570 + R 31,500 + R 30,600 = R 95,670

Step 3

2.2.3 Calculate the stock turnover rate of tracksuits (use the average stock).

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Answer

The average stock can be calculated as:

  1. Add opening and closing stock:

    • Opening stock = 125 units + Closing stock = 96 units, thus:
    • Average stock = \frac{(125 + 96)}{2} = 110.5 \text{ units}

  2. Stock turnover rate:

Stock Turnover Rate=Cost of SalesAverage Stock=R95,670110.5≈4.71exttimes\text{Stock Turnover Rate} = \frac{\text{Cost of Sales}}{\text{Average Stock}} = \frac{R 95,670}{110.5} ≈ 4.71 ext{ times}

Step 4

2.2.4 It was discovered that vests were missing from the June 2016 delivery. Calculate the number and value of the missing vests.

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Answer

To determine the missing vests:

  1. Number of vests missing:
(160×340)−298=186ext(unitsmissing)(160 \times 340) - 298 = 186 ext{ (units missing)}
  1. Value of missing vests:
16 (missing vests)×R92=R1,47216 \text{ (missing vests)} \times R92 = R1,472

Step 5

2.2.5 Calculate the Gross Profit made by the vests department.

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Answer

To find the Gross Profit for the vests department:

  1. Sales:
298 units×R140=R41,720298 \text{ units} \times R140 = R41,720
  1. Cost of Sales:
R13,760+R33,740+R17,670=R29,830R 13,760 + R 33,740 + R 17,670 = R 29,830
  1. Gross Profit:
R41,720−R29,830=R11,890R 41,720 - R 29,830 = R 11,890

Step 6

2.2.6 Identify TWO problems other than the missing vests in the vests department.

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Answer

  1. Problem 1: Low days worked (172/264)

    • Solution: Investigate reason for low attendance. Monitor employee leave-taking and adjust shifts to cover this.

  2. Problem 2: Low stock turnover (2 times)

    • Solution: Implement a more effective inventory system to manage stock levels better and reduce excess stock.

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