Photo AI
2.1 CONCEPTS Choose the correct term from those given in brackets - NSC Accounting - Question 2 - 2019 - Paper 1
Question 2
2.1 CONCEPTS Choose the correct term from those given in brackets. Write only the term next to the question numbers (2.1.1 to 2.1.3) in the ANSWER BOOK. 2.1.1 The m... show full transcript
Worked Solution & Example Answer:2.1 CONCEPTS Choose the correct term from those given in brackets - NSC Accounting - Question 2 - 2019 - Paper 1
Step 1
2.2.1 Calculate the value of closing stock of cameras on 30 April 2019.
Answer
To calculate the closing stock for cameras using the specific identification method, we need to assess both models:
Grand Model:
- Opening stock: 20 units at R5,500
- Purchases: 240 units at R7,750
- Units sold: 14 units
First, calculate the total cost of stock available for the Grand Model:
- Total cost for opening stock = 20 units x R5,500 = R110,000
- Total cost for purchases = 240 units x R7,750 = R1,860,000
- Total stock value = R110,000 + R1,860,000 = R1,970,000
Since all 14 units sold were from the Grand Model, the remaining stock calculation will be:
- Available units = 240 - 14 = 226 units
- Cost of remaining stock = 226 units x R7,750 = R1,751,500
De-Lux Model:
- Net purchases: 270 units at R1,104,000
- Units sold: 235 units
Calculating the cost for De-Lux Model:
- Total value of stock = R1,104,000
- Cost per unit = R1,104,000 / 270 = R4,088.89
- Remaining stock = 270 - 235 = 35 units
- Cost of remaining stock = 35 units x R4,088.89 = R143,111.11
Now, add both models' closing stock:
- Grand Model closing stock = R1,751,500
- De-Lux Model closing stock = R143,111.11
- Total closing stock = R1,751,500 + R143,111.11 = R1,894,611.11
Step 2
2.2.2 Calculate the value of closing stock of photo frames.
Answer
To determine the closing stock for photo frames:
Information Provided:
- Opening stock: 60 units at R7,200
- Purchases: 120 units at R108,000
- Returns: 30 units at R450
- Closing stock: 80 units
- Sales: 657 units
First, calculate the total available stock:
- Total units available = Opening stock + Purchases - Returns
- Total units = 60 + 120 - 30 = 150 units
Next, calculate the cost per unit:
- Total purchase cost = R108,000
- Cost per unit = R108,000 / 150 = R720
Now, to find the value of the closing stock:
- Value of closing stock = Closing units x Cost per unit
- Value = 80 x R720 = R57,600
So, the closing stock of photo frames is R57,600.
Step 3
2.2.3 The owner suspects that photo frames are being stolen. Provide a calculation to confirm his suspicions.
Answer
The owner suspects theft of photo frames due to discrepancies in stock numbers. To confirm this, compare the expected stock against actual stock:
- Expected units based on opening stock and purchases:
- Opening stock = 60
- Purchases = 120
- Returns = 30
- Expected total = Opening + Purchases - Returns = 60 + 120 - 30 = 150
- Actual units sold = 657
- Closing stock calculated = 80
Now, let's calculate:
- Expected available units = 150
- Actual sold units = 657
- Missing units = Expected available - Closing stock
- Thus, 150 - 80 = 70
The conclusion is that 70 units may have gone missing, raising suspicion of theft.
Step 4
2.2.4 Explain why employing an assistant at R3,500 per month is NOT a good idea.
Answer
Point 1: Financial Evaluation
- Wages for the assistant would cost R3,500 per month. Over a year, this totals R42,000.
- Calculating the potential losses from the missing photo frames (calculated earlier as 70 units): If these units were sold at R720 each, it amounts to R50,400. Employing an assistant does not adequately cover the financial loss from missing stock, as long-term losses could exceed costs.
Point 2: Insignificant Missing Items
- The identified missing units (70) are relatively small compared to the total available stock. Given that total units sold were around 657, these missing units constitute only around 10%, which may not justify the expense of an assistant.
- Instead of hiring help, it may be more productive to improve current inventory tracking to address theft effectively.