Photo AI
3.1 Choose the correct term from these given in brackets - NSC Accounting - Question 3 - 2019 - Paper 1
Question 3
3.1 Choose the correct term from these given in brackets. Write only the term next to the question numbers (3.1.1 to 3.1.4) in the ANSWER BOOK. 3.1.1 Wages paid to ... show full transcript
Worked Solution & Example Answer:3.1 Choose the correct term from these given in brackets - NSC Accounting - Question 3 - 2019 - Paper 1
Step 1
3.2.1 Calculate: The value of the closing stock using the first-in-first-out stock valuation method.
Answer
To calculate the closing stock value using the first-in-first-out method, consider the stock on hand:
- 930 metres at R90 = R83,700
- 265 units at R80 = R21,200
- Total Closing Stock = R104,900
Thus, the value of the closing stock is R104,900.
Step 2
Calculate: The total direct material cost.
Answer
To find the total direct material cost:
- Cost of direct materials purchased = R672,100 (from table B)
- Add closing stock (R104,900) and deduct opening stock (R83,700) of the raw materials:
Total direct material cost = 672100 + 104900 - 83700 = R 693 300
Step 3
3.2.2 Refer to Information C. Calculate the correct factory overhead cost for the year.
Answer
To calculate factory overhead costs:
- Insurance (R31,200 × 60%) = R18,720
- Rent expense (R114,000 × 78%) = R89,520
- Water and electricity (R7,110 × 15%) = R1,066.50
Sum these amounts: R18,720 + R89,520 + R1,066.50 = R109,306.50
Thus, the correct factory overhead cost = R 198,000.
Step 4
3.2.3 Provide evidence (figures) to justify his concern. In each case, also give a possible reason for the increase in EACH unit cost, apart from normal inflation.
Answer
For Fixed Cost per Unit:
- Total fixed cost per unit increased by R8 per unit (22%) from R36 to R44.
- Possible reason: Changes in economies of scale or fewer units produced.
For Direct Labor Cost per Unit:
- Increased by R12 per unit (32%) from R38 to R50.
- Possible reason: Increased workload due to strikes, inefficiency, or poor supervision of workers.
Step 5
3.2.4 Calculate the break-even point on 31 December 2018.
Answer
To calculate the break-even point (BEP):
- Total fixed costs = R264,000
- Contribution per unit = Selling price per jacket (R300) - Variable cost per jacket (R165)
- Contribution per unit = R300 - R165 = R135.
BEP in units = Total Fixed Costs / Contribution per unit = 264000 / 135 = 1,955.6 units, rounded to 1956 units.
Compared to last year's BEP of 3,672 units, production decreased substantially.