NSC Accounting Inventory systems: 2.1 Choose the stock system/meth

Question

2.1 Choose the stock system/method from the list provided, that is best described by each of the statements below. Write down the stock system/method next to each number (2.1.1–2.1.5) in the ANSWER BOOK.

2.1.1 Similar value, low cost stock items are valued by taking into account the total cost of the items divided by the number of items available for sale.

2.1.2 The closing stock value of goods is determined by assuming that the goods bought first, are sold first.

2.1.3 Cost of sales is recorded at the point of sale and stock records are adjusted accordingly.

2.1.4 The closing stock figure to be used to calculate the cost of sales is determined by a physical stock count at the end of an accounting period.

2.1.5 Sales and cost of sales records are maintained for the individual items sold due to these being high value goods.

2.2 COMRADES LTD

Comrades Ltd sells sporting equipment. The information relates to the tracksuits and vests department for the financial year ended 30 April 2017.

REQUIRED:

2.2.1 Calculate the selling price per unit for tracksuits.

2.2.2 Calculate the cost of sales of tracksuits using the FIFO method.

2.2.3 Calculate the stock turnover rate of tracksuits (use the average stock).

2.2.4 It was discovered that vests were missing from the June 2016 delivery. Calculate the number and value of the missing vests.

2.2.5 Calculate the Gross Profit made by the vests department. Note that this department uses the weighted average method to value stock.

2.2.6 The owner is not satisfied with the performance of the vests department. Identify TWO problems, other than the missing vests, in this department. Quote figures. In each case, provide a solution to the problem.

INFORMATION:

Tracksuits
Working days per year 264 days
Days worked by department 250 days
Stock turnover rate
Sales Units Amount (R)
515 R296 125
Selling price per unit

Vests
Units Amount (R)
298 R140
Stock
Opening stock
Units Amount (R)
125 R30 000
160 R13 760
Purchases:
June 2016 R330 170 450
August 2016 R290 33 740
November 2016 R340 51 800
January 2017 R340 57 680

Closing stock
10 units of the January 2017 purchases
Closing stock 96 186 R17 670

2.1 Choose the stock system/method from the list provided, that is best described by each of the statements below - NSC Accounting - Question 2 - 2017 - Paper 1

Worked Solution & Example Answer:2.1 Choose the stock system/method from the list provided, that is best described by each of the statements below - NSC Accounting - Question 2 - 2017 - Paper 1

2.2.1 Calculate the selling price per unit for tracksuits.

2.2.2 Calculate the cost of sales of tracksuits using the FIFO method.

2.2.3 Calculate the stock turnover rate of tracksuits (use the average stock).

2.2.4 Calculate the number and value of the missing vests.

2.2.5 Calculate the Gross Profit made by the vests department.

2.2.6 Identify TWO problems other than the missing vests, in the VESTS department.

Problems Identified

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