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4.1 Choose the correct cost concepts from those given in brackets - NSC Accounting - Question 4 - 2023 - Paper 2
Question 4
4.1 Choose the correct cost concepts from those given in brackets. Write only the word(s) next to the question numbers (4.1.1 to 4.1.3) in the ANSWER BOOK. 4.1.1 Th... show full transcript
Worked Solution & Example Answer:4.1 Choose the correct cost concepts from those given in brackets - NSC Accounting - Question 4 - 2023 - Paper 2
Step 1
4.2.1 Calculate the value of the closing stock on 28 February 2023. Use the specific identification method.
Answer
To calculate the value of closing stock for both models using the specific identification method:
-
Hawi:
- Opening stock = 90 units at R3,800 each = R342,000
- Purchases = 340 units at R3,800 each = R1,292,000
- Total Hawi available = 90 + 340 = 430 units.
- Units sold = 300.
- Therefore, closing stock = 430 - 300 = 130 units.
- Value of closing stock = 130 units at R3,800 each = R494,000.
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Yama:
- Purchases = 495 units at R5,410 each = R2,677,950
- Units sold = 430.
- Therefore, closing stock = 495 - 430 = 65 units.
- Value of closing stock = 65 units at R5,410 each = R351,650.
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Total Closing Stock Value:
- Total value = R494,000 + R351,650 = R845,650.
Step 2
4.2.2 Calculate how long (in days) it will take to sell the closing stock of the Hawi printers.
Answer
To determine how long it will take to sell the closing stock of Hawi:
- Closing stock = 130 units.
- Daily sales = 300 units sold / 55.2 days stockholding period.
- Daily sales = 300 / 55.2 = 5.43 units per day.
To calculate the days to sell:
- Days to sell = Closing stock / Daily sales = 130 / 5.43 ≈ 23.98 days.
Step 3
4.2.3 Explain whether Sipho should be concerned about the stockholding periods of the Hawi and Yama printers. Provide figures. Give possible reasons for the difference in the holding periods of the two models.
Answer
Sipho should be concerned about the differing stockholding periods:
- Hawi: 152.1 days holding period suggests slow sales, possibly due to being old stock or unpopular models.
- Yama: 55.2 days holding period indicates good demand.
Possible reasons for differences:
- Sales Performance: Yama may have better technology attracting more customers, while Hawi may need a redesign or marketing push.
- Market Trends: Yama could be aligned with current market needs, offering new features or compatibility, while Hawi may lack updates.
Step 4
4.3.1 Calculate the cost price of vehicles on 1 March 2022.
Answer
To calculate the cost price of vehicles on 1 March 2022:
- Cost price = Balance 2023 (R930,000) + Trade-in value (R260,000) - Accumulated depreciation on vehicles (R275,000 multiple calculations for clarity) yield: Cost price = R930,000 - R275,000 + R260,000 = R915,000.
Step 5
4.3.2 Explain to the bookkeeper why his method is incorrect and provide a calculation to support your explanation.
Answer
The bookkeeper's method is incorrect because:
- Asset Depreciation: The asset is not fully depreciated, and thus retains some value.
- Calculation Evidence:
- Initial value (R300,000) - Accumulated depreciation (R262,500) = Remaining value (R37,500), which he has not considered.
Step 6
4.3.3 Explain TWO possible arguments that the CEO can use to support his decision.
Answer
Two possible arguments Lee Klou can use include:
- Community Contribution: Donating the computers helps the local school and fosters good community relationships, potentially enhancing the company's public image.
- Attracting Talent: New technology can lead to greater efficiencies, as better-trained students may later seek employment, directly benefiting the company.