Photo AI
2.1 CONCEPTS Choose the correct term from those given in brackets - NSC Accounting - Question 2 - 2019 - Paper 1
Question 2
2.1 CONCEPTS Choose the correct term from those given in brackets. Write only the term next to the question numbers (2.1.1 to 2.1.3) in the ANSWER BOOK. 2.1.1 The m... show full transcript
Worked Solution & Example Answer:2.1 CONCEPTS Choose the correct term from those given in brackets - NSC Accounting - Question 2 - 2019 - Paper 1
Step 1
2.2.1 Calculate the value of closing stock of cameras on 30 April 2019.
Answer
To calculate the value of the closing stock of cameras on 30 April 2019, we will identify the units sold and the remaining stock.
Using the specific identification method:
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Grand Model:
- Opening stock = 20 units at R500 = R10,000
- Purchases = 240 units at R750 each = R180,000
- Units sold = 14
- Remaining = 20 + 240 - 14 = 246 units
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De-Lux Model:
- Purchases = 270 units valued at R1,104,000, minus returns of 30 units valued at R12,600= 240 units
- Remaining = 270 - 30 = 240 units
Now calculating total value of closing stock:
- Closing stock value = (246 * R750) + (240 * (R1,104,000 / 270))
- Total = R185,250 + R978,667.45 = R1,163,917.45
Hence, the value of the closing stock is approximately R1,163,917.45.
Step 2
2.2.2 Calculate the value of closing stock of photo frames.
Answer
To find the value of the closing stock of photo frames, we start with:
- Opening stock = 60 units at R120 = R7,200
- Purchases (to be calculated from the sales)
- Returns = 30 units at R15 = R450
- Sales = 657 units
Using the weighted average method: First, calculate the cost price of the frames.
- Total cost of frames = R108,000 + Opening stock.
- Closing stock = 80 units at average cost price.
Average Cost Price = Total Cost / Total Units Available.
- Total frames available = Opening stock + Purchases - Returns.
- Calculation gives:
- Total frames = (60 + (108,000 / R120) - 30).
Thus, closing stock value = 80 units * average cost price.
Final value will be approximately R14,570.
Step 3
2.2.3 The owner suspects that photo frames are being stolen. Provide a calculation to confirm his suspicions.
Answer
To confirm the owner's suspicions regarding the stolen photo frames, we will compare the expected closing stock with the actual closing stock.
From the calculation:
- Expected closing stock = 80 units
- Actual closing stock = 657 units sold.
Calculation:
- Units missing = Actual Sales - Expected Closing Stock = 657 - (60 + (108,000 / R120) - 30).
- If expected closing stock is less due to theft, we can say:
- Expected units = 750, actual = 657, thus units missing = 93.
If the difference in units sold is significant (more than 2%), it justifies the suspicion of theft.
Step 4
2.2.4 Explain why employing an assistant at a wage of R3 500 per month is NOT a good idea.
Answer
Tom is considering employing an assistant at R3,500 per month to manage the stock. Here are two reasons why this may not be cost-effective:
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Cost of Wages vs. Stolen Stock: Tom's potential loss due to stolen photo frames appears higher than the assistant's wage. If the average missing frames cost up to R4,000, hiring the assistant may not cover these losses.
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Insignificant Missing Items: The units missing are less than 2% of total stock, signaling that hiring additional help may not significantly reduce theft. It may be more prudent to invest in loss prevention systems.