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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
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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 using the first-in-first-out (FIFO) method, we take the cost of the opening stock and then add the costs of purchases used to fulfill orders. Closing stock = (830 for 930 meters) + (125 for 265 meters) = R104,900.
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3.2.2 Refer to Information C. Calculate the correct factory overhead cost for the year.
Answer
The factory overhead cost must account for additional expenses not previously included:
- Insurance: R31,200 × 60% = R18,720
- Rent expense: R114,000 × 78% = R89,040
- Water and electricity: R7,110 × 15% = R1,066.50
Total Factory Overhead Cost = R84,330.
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3.2.3 The owner is concerned about the increase in the following: Total fixed cost per unit Direct labour cost per unit 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
Total fixed cost per unit increased from R36 to R44 (22%). This could be due to changes in economies of scale leading to fewer units produced.
Direct labour cost per unit increased from R38 to R50 (32%). Possible reasons could include more overtime, worker strikes leading to inefficiencies, or supervisors not effectively managing labor.
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3.2.4 Calculate the break-even point on 31 December 2018.
Answer
Break-even point = Total Fixed Costs / Contribution Margin per unit = R264,000 / R165 = 1,600 units.
To understand if there was improvement, compare with last year: the production and the break-even point both decreased. Production went from 7,560 units to 6,000 units; the break-even point decreased from 1,956 units to 1,955.6 units.
The owner notes an increase in profit as he sold more units in excess of the break-even point.