Calculate the value of closing stock for cabinets on 30 September 2019 using the first-in-first-out method. In 2019, the company decided to extend the target market and to grant trade discounts to increase sales. 2.1 Calculate the % mark-up achieved in 2019. 2.2 Provide TWO points (with figures) to prove that this decision achieved its aims. 3.3 Calculate the stockholding period for lamps (use closing stock). 3.4 George is concerned about the control of lamps. An investigation revealed that the store manager was supplying local boarding houses with lamps without documentation. Calculate the number of missing lamps. Give TWO suggestions to solve this problem. During April 2019, while George was in hospital, Bruce Swann (the chief financial officer) decided to include television sets in their product range. He was able to secure bulk discounts from Roseway on two TV sets, namely LYN and KYA. Calculate the value of the closing stock of TV sets on 30 September 2019 using the specific identification method. Explain THREE different concerns that George would have about this problem.

NSC Accounting Inventory valuation methods: Calculate the value of closing s

Calculate the value of closing stock for cabinets on 30 September 2019 using the first-in-first-out method - NSC Accounting - Question 3 - 2019 - Paper 1

Question 3

Calculate the value of closing stock for cabinets on 30 September 2019 using the first-in-first-out method. In 2019, the company decided to extend the target market... show full transcript

Worked Solution & Example Answer:Calculate the value of closing stock for cabinets on 30 September 2019 using the first-in-first-out method - NSC Accounting - Question 3 - 2019 - Paper 1

Step 1

Calculate the value of closing stock for cabinets on 30 September 2019 using the first-in-first-out method.

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Answer

To calculate the closing stock using the FIFO method, we need to consider the most recent purchases. Assuming we have the following purchases:

230 units at a cost of $x each
250 units at a cost of $y each
50 units at a cost of $z each

The total closing stock can be computed as:

Identify the units:
- 230 + 250 + 50 = 530 units
Calculate the value:
- Value = (230 * x) + (250 * y) + (50 * z)
Result will be provided for final calculation.

Step 2

Calculate the % mark-up achieved in 2019.

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Answer

To calculate the % mark-up achieved in 2019, we use the formula:

ext{% Mark-up} = \left( \frac{\text{Gross Profit}}{\text{Cost Price}} \right) \times 100

Gross Profit is defined as: Sales - Cost Price.
Substitute the sales and cost amounts:
- Gross Profit = Sales Amount - Cost Amount
- Replace with the specific figures for 2019 to derive the mark-up.

Step 3

Provide TWO points (with figures) to prove that this decision achieved its aims.

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Answer

Sales Increase: Sales increased from $R375,000 to$ R480,000, a difference of $R105,000 or 3.1%.
Customer Growth: The number of customers rose from 26 to 37, which indicates an increase of 42%.

Step 4

Calculate the stockholding period for lamps (use closing stock).

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Answer

The stockholding period can be calculated using the formula:

ext{Stockholding Period} = \frac{\text{Average Stock}}{\text{Cost of Sales}} \times 365

Assuming Average Stock and Cost of Sales are known, replace with relevant figures and compute.

Step 5

Calculate the number of missing lamps.

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Answer

Missing lamps can be determined by:

Starting stock:
- Starting stock of lamps = 600
Purchases:
- Total purchases = 365
Sales:
- Sold = 6375
Missing Lamps:
- Missing = Starting Stock + Purchases - Sales
- Substitute to find the total number of missing lamps.

Step 6

Give TWO suggestions to solve this problem.

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Answer

Increase Supervision: Implement regular audits and inspections of stock to catch discrepancies early.
CCTV Installation: Utilize CCTV cameras to monitor stock areas and prevent potential mishandling.

Step 7

Calculate the value of the closing stock of TV sets on 30 September 2019 using the specific identification method.

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Answer

Using the specific identification method, calculate:

LYN TV:
- Cost = $2,580,000
- Value calculated will follow.
KYA TV:
- Cost = $3,888,000
- Value calculated will follow.

Total value = Value of LYN + Value of KYA.

Step 8

Explain THREE different concerns that George would have about this problem.

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Answer

Financial Loss: Concerns regarding potential loss of revenue due to unaccounted lamps and the impact on profitability.
Inventory Control: Effectiveness of inventory management systems in accurately tracking items.
Legal Issues: Risks associated with undocumented sales and potential legal ramifications from supplying items without proper records.

Calculate the value of closing stock for cabinets on 30 September 2019 using the first-in-first-out method - NSC Accounting - Question 3 - 2019 - Paper 1

Worked Solution & Example Answer:Calculate the value of closing stock for cabinets on 30 September 2019 using the first-in-first-out method - NSC Accounting - Question 3 - 2019 - Paper 1

Calculate the value of closing stock for cabinets on 30 September 2019 using the first-in-first-out method.

Calculate the % mark-up achieved in 2019.

Provide TWO points (with figures) to prove that this decision achieved its aims.

Calculate the stockholding period for lamps (use closing stock).

Calculate the number of missing lamps.

Give TWO suggestions to solve this problem.

Calculate the value of the closing stock of TV sets on 30 September 2019 using the specific identification method.

Explain THREE different concerns that George would have about this problem.

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