QUESTION $1(20$ Marks$)$

$1\mathrm{.}1$

REQUIRED

Study the information provided below and determine whether Neston Traders should borrow the cash to settle

the account. Motivate your answer by calculating the cost of forfeiting the discount $($expressed as a

percentage to two decimal places$).$

$(5$ marks$)$

INFORMATION

Neston Traders purchased inventory on credit for R$30000.$ The supplier offered Neston Traders the option

to settle the account by paying R$28800$ up to $10$ days after the sale or pay R$30000$ by the end of $60$ days.

Neston Traders can borrow cash from its bank at a rate of $18$ percent per annum to settle the account within

$10$ days.

$1\mathrm{.}2$

REQUIRED

Use the information provided below to calculate the economic order quantity.

$(5$ marks$)$

INFORMATION

Maxwell Wholesalers anticipates sales of $10000$ units per month, a purchase price of R$40$ per unit, an

ordering cost of R$12$ per order, and a carrying cost of $20\%$ of the unit cost price.

$1\mathrm{.}3$

REQUIRED

Use the information given below to calculate the value of closing inventory as at $31$ March $2024$ and the value

of issues during March $2024$ using the following methods of inventory valuation:

$1\mathrm{.}3\mathrm{.}1$ First$-$in$-$first$-$out $(5$ marks$)$

$1\mathrm{.}3\mathrm{.}2$ Weighted average cost. $($Express the average cost per unit in Rands and cents.$)(5$ marks$)$

INFORMATION

The following transactions of Seatides Manufacturers took place during March $2024$ in respect of a component

used in production:

Date Transactions

$01$ Opening inventory $800$ units @ R$20$ per unit

$07$ Purchased from a supplier $1400$ units @ R$22$ per unit

$15$ Purchased from a supplier $2700$ units @ R$24$ per unit

$16$ Returned to the supplier $($see $15$thMarch$)200$ units

$28$ Purchased from a supplier $300$ units @ R$25$ per unit

$31$ Issued to production during March $4000$ units