4.1 Choose the correct cost concepts from those given in brackets - NSC Accounting - Question 4 - 2023 - Paper 2

Using the average selling rate, we can determine how long it will take to sell the remaining stock:

• Selling rate: 300 units sold in a period of 55.2 days
• Therefore, the daily sale rate is:

$\text{Daily selling rate} = \frac{300 \text{ units}}{55.2 \text{ days}} \approx 5.41 \text{ units/day}$

• Remaining stock: 130 units
• Time to sell remaining stock:

$\text{Time} = \frac{130 \text{ units}}{5.41 \text{ units/day}} \approx 24.0 \text{ days}$

Sipho should be concerned about the stockholding periods as Hawi’s period is 152.1 days while Yama’s is 55.2 days. This significant discrepancy indicates that:

1. Hawi Models: These are either not selling as quickly, possibly due to outdated technology or lack of demand.
2. Yama Models: Selling faster suggests better demand and possibly more updated features or marketing.

Possible reasons:

• Hawi may have slower sales due to it being more expensive or less technologically advanced.
• Yama’s faster turnover rate may attract customers due to more features, better value, or enhanced marketing.

To determine the cost price of vehicles on 1 March 2022:

• Given:
  • Cost of vehicles at acquisition was R930,000.
  • Trade-in value R260,000.
• Thus, the effective cost price would be:
  • $\text{Cost} = R930,000 - R260,000 = R670,000$

The bookkeeper's method is incorrect because he did not account for depreciation correctly. Since the asset has already undergone depreciation, the value should reflect this:

• Calculation:
  • Full value of the vehicle is R670,000.
  • Assuming the asset is mostly depreciated means it should reflect a significant loss.
  • Thus, using the final calculation:
  • $R670,000 - R75,000 = R595,000 \text{ (correct reflection of value)}$.

1. Community Engagement: Donating old computers to a local school enhances the company's image as a socially responsible business, fostering community goodwill and potentially attracting customers.
2. Environmental Responsibility: The decision may support sustainability efforts by reducing electronic waste, thereby promoting the company as environmentally friendly, which resonates with modern consumer values.