Zephyr Traders opened on 1 January 2024 and sells portable power systems (PPS) that are used by the public to cope with load-shedding - NSC Accounting - Question 4 - 2024 - Paper 2

We calculate each component as follows:

(i) Cash sales for June 2024:

• Cash sales = 55% of total sales. Therefore, with total sales of R950 400, cash sales are: $Cash = 950 400 imes 0.55 = 1 161 600$

(ii) Payments to creditors for June 2024:

• Payments = 70% of purchases in the preceding month (which is R1 210 000 for June, projected). $Payments = 1 210 000 imes 0.70 = 847 000$

(iii) Hire of delivery vehicle:

• The current expense = R34 680, adjusting for the increase of 18% brings us to: $Hire = 34 680 imes (1 + 0.18) = 41 210$
• This amount becomes R34 680 + 6 000 (before applying surplus) = final total confirmed as R41 210.

To calculate the percentage increase in the salaries of office workers:

1. Current salary before increase = R64 480
2. Projected salary after increase = R62 000.
3. Increase calculation: $Increase = 64 480 - 62 000 = 2 480$
4. Percentage increase: ext{Percentage increase} = rac{2 480}{62 000} imes 100 = 4 ext{\\%}

The competitor had a notable impact on the sales and cash flow metrics for April:

1. Reduction in units sold: Dan had budgeted to sell 200 units but actual sales only amounted to 148 units, which translates as a drop of:

   • Sales reduced by 26%, showing significant market influence.

2. Total sales decrease: Actual total sales were less than budgeted by R457 600 (from R1 760 000), indicating a significant cash flow drop on account of the new competition, emphasized by experiencing only R1 302 400 actual sales.

These shifts indicate that the competitor's arrival seriously decreased revenue potential.

Considering Dan's strategy adjustments for May:

1. Units sold satisfaction: Although he managed to sell 200 units as planned, it was a reduction of 25 from the expected number, showing that while targets were met, it did not compare favorably against budgeted figures.

2. Impact of price adjustment: The new price strategy led to a marginal increased sales performance, filling the previous month’s sale gap, but still showed less enthusiasm when contrasted to overall market expectations. His adjustments failed to meet projections, suggesting a need for re-evaluation.

1. Support for John's opinion: His satisfaction stems from the raised commission from R1 320 to R1 485 per unit sold, which improved his earnings significantly, leading to a comfortable professional outlook.

2. Support for Sally's opinion: Conversely, Sally feels less favorable due to her shift to a fixed salary from earlier commission structure, diminishing her earnings potential, and the fear of retrenchment with fewer salespersons leading to overwork.

To calculate the total loan we need:

1. The total loan amount originally set at R13 800 for 12 months, plus the expected monthly charge:
   • Total loan repayment structure ensures payments commence properly: $ext{Loan amount} = 13 800 imes 12 = 165 600$
   • Total with interest calculated as R1 656 000 overall.
   • Specifically accounts for simple projections based only on deposit.

In favor of purchasing:

1. Ownership equity: Buying property builds long-term asset value and potential appreciation over time, as opposed to renting, making it a wise strategic decision based on financial stability.

Contrarily, against purchasing: 2. Immediate costs implications: The initial funding requirements (like a 20% deposit) and maintenance can stretch the firm’s cash flow, severely affecting operational resources in the short term.