QUESTION 1
1.1 CREDITORS’ RECONCILIATION
1.1.1
| Creditors’ Ledger account of Fragrance Suppliers | Statement received from Fragrance Suppliers | |
| Preliminary balance/total | R28 375 | R33 770 |
| (i) | ||
| (ii) | ||
| (iii) | ||
| (iv) | ||
| (v) | ||
| (vi) | ||
| (vii) | ||
| Correct balance/total |
* for both totals Opening balance/total have to be included
1.1.2
Calculate the average creditors’ payment period (in days).
|
5
1.1.3
Provide TWO internal control measures which can be implemented to ensure better management over creditors.
|
4
1.2 MANAGEMENT OF CASH
1.2.1
Provide TWO concerns the owner should have regarding these outstanding deposits.
|
4
1.2.2
| Provide TWO suggestions that can be used to ensure that this does not happen again. Any TWO
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QUESTION 2
2.1 STUTTERHEIM MANUFACTURERS
2.1.1 Production Cost Statement for the year ended 30 April 2022.
| Direct labour cost | 2 150 880 |
| Prime cost LC + DMC | 3 690 000 |
| Factory overhead cost (1 405 350 + 40 950 - 36 300 ) | 1 410 000 |
| Total manufacturing cost | 5 100 000 |
| Work-in-progress (1 May 2021) | 426 000 |
| 5 526 000 | |
| Work-in-process (30 April 2022) | (261 000) |
| Cost of production of finished goods (39 000 x R145) | 5 265 000 |
2.1.2Abridged Statement of Comprehensive Income (Income Statement) for the year ended 30 April 2022.
| Gross profit | 3 750 000 |
| Selling and distribution cost (1 829 550 + 14 520 ) | (1 844 070) |
| Net profit | 593 250 |
2.2 UNIT COST AND BREAK-EVEN
2.2.1
Explain the difference between fixed cost and variable cost. Any valid explanation |
2.2.2
| Calculate the break-even point for 2022. |
5
2.2.3
Comment on the break-even point and the level of production for 2021 and 2022. Quote figures.
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6
2.2.4 Identify the variable cost which the owner should be concerned about. Explain and provide a calculation to support your answer.
2.2.5 Even though there was a decrease in the fixed costs per unit, the owner is still not satisfied with the control over fixed costs. Explain why he feels this way and provide calculations to support his concern.
Explanation of economies of scale
Comparative figures quoted
4
2.2.6 Give ONE possible reason for the decrease in selling and distribution cost.
TOTAL MARKS 50
QUESTION 3
3.1 INVENTORY VALUATION
3.1.1 Calculate the value of closing stock on 28 February 2022.
Calculate the gross profit for the year ended 28 February 2022.
3.1.2 What advice can you offer Happiness in this regard? State TWO points.
Any TWO valid points
3.2 MANAGEMENT OF STOCK (PROBLEM-SOLVING)
3.2.1 Provide a calculation to verify that sun hats are being stolen.
Give TWO points of advice to Happiness to address the problem.
Any TWO valid points
3.2.2
| Happiness is unsure whether he is charging the correct prices for the sun glasses and the beach bags. Give him advice on EACH product. Quote figures. | |
| PRODUCT | ADVICE WITH FIGURES |
| Sun glasses | Mark-up of 25% is deemed as reasonable by buyers. Selling price of R3 438 acceptable for buyers. 1 850 units are sold. Stock holding period is 52 days. Closing stock only 280 units. |
| Beach bags | Mark-up of 80% is deemed as too high by buyers. Selling price of R702 is not acceptable for buyers. Only 740 units are sold. Stock holding period of 163 days/ way too long Closing stock of 420 units are too high. If mark-up % is reduced, sales may increase. |
6
TOTAL MARKS 35
QUESTION 4
4.1 FIXED ASSETS
4.1.1 GENERAL LEDGER OF FEZEKA TRADERS LTD
Equipment Dr Cr | |||||
| 2021 Jul 1 | Balance b/d | 260 000 | |||
7
| Accumulated Depreciation on Equipment | |||||
| Dr | cr | ||||
| 2021 Jul 1 | Balance b/d | 90 000 | |||
12
Workings:
Dep on 31 March 2022:
1/7/20 – 30/6/21 35 000 x 20% = 7 000
1/7/21 – 31/3/22 (35 000 – 7 000) x 20% x 9/12 = 4 200
Dep on 30 June 2022:
Old F: (260 000 – 35 000) – (90 000 – 7000) x 20% = 28 400
New F: 195 000 x 20% x 3/12 = 9 750
4.2 INTERNAL AUDIT PROCESSES
4.2.1 Name the type of report that was received.
4.2.2 Explain TWO possible consequences of such a report, for the company.
Any TWO valid points
4.2.3 How should the Board of Directors handle this matter? Provide TWO points.
Any TWO valid points
4
QUESTION 4:
TOTAL MARKS 35
TOTAL: 150