2.1 CONCEPTS Complete the following sentences by filling in the missing words - NSC Accounting - Question 2 - 2017 - Paper 1

To calculate the value of the stock using the weighted-average method, we first need to determine the net purchases:

1. Total Cost = R4 272 000
2. Total Carriage = R110 400
3. Total Purchasing Costs = R4 412 900

Now calculate:

$\text{Total Units} = 350 + 3 150 - 20 = 3 480$

Then, we compute the average:

$\text{Weighted Average} = \frac{R4 412 900 + R110 400}{3 480} = R1\,700$

Finally, the value of the stock is:

$\text{Value of Stock} = \text{Weighted Average} \times \text{Closing Stock Units} = R1\,700 \times 465 = R641\,700$

Gross profit can be calculated using the formula:

$\text{Gross Profit} = \text{Total Sales} - \text{Cost of Goods Sold}$

Using the figures:

1. Total Sales = R5 400 000
2. Cost of Goods Sold = R4 758 300 (which includes gross overheads of R641 700 calculated from previous steps)

Therefore,

$\text{Gross Profit} = R5 400 000 - R4 758 300 = R641\,700$

To determine how long it is expected to sell the closing stock, use the formula:

$\text{Days} = \frac{\text{Closing Stock Units}}{\text{Average Daily Sales}} \times 365$

Calculating the average daily sales gives:

$\text{Average Daily Sales} = \frac{3000}{365} \approx 8.22 \text{ bats/day}$

Thus,

$\text{Days} = \frac{465}{8.22} \approx 56.5 \text{ days}$

To support André's concern,

• Calculate the difference in stock levels:

$\text{Stock Count} = 350 + 3 150 - 20 - 465 = 3 015$

This shows that there are 15 bats missing. This discrepancy indicates possible lack of control over inventory.

André can improve inventory control by implementing regular stock counts. By doing so, he can identify discrepancies early, which helps prevent inventory loss and aids in maintaining accurate stock records. This would entail systematic inspections on a monthly or quarterly basis.