QUESTION 4 Your organisation is looking to import a new type of product parts, used for assembly in its final products, from the United States. Management is concerned about the volatility in the USDZAR exchange, which makes it difficult to accurately do unit production costing and product pricing. Management is considering two options. Option A is to import a generic, standardised version of the part from Supplier A. Option B is to import a customisable version of the part from Supplier B. Neither suppliers are willing to agree to a fixed-ZAR based contract, and each order will be in USD with the exchange rate fixed at time of order placement. Considering the concerns around volatile exchange rates outlined above, which one of the below statements are most correct? [1] Customised items are more readily available in the market and would allow the organisation to eventually diversify its sources of supply and negotiate more favourable exchange rate terms. [2] Standardisation will allow larger quantities to be ordered at a time, which affords the organisation the flexibility to wait out highly volatile periods and only conclude orders when the currency exchange is favourable. [3] Standardised items are generally lower-priced, which will enable the organisation to reduce its risk exposure to fluctuating exchange rates. [4] Customised items typically require lower inspection costs, since errors and quality discrepancies are less; these cost savings can be used to hedge against exchange rate fluctuations.

QUESTION 5 ZZs Fashion, a small online clothing retailer operating only in Gauteng, is considering buying a new forklift to boost productivity in their distribution facility. The owner indicated that, if the payback period for the forklift is less than 4 years, ZZs credit provider will supply credit for the purchase. If the payback period is calculated as: Payback = machine cost / Y then Y represents [1] net cash flow after operating costs, depreciation and interest charges have been deducted. [2] net cash flow before depreciation deductions. [3] net cash flow after operating costs, excluding interest charges on the capital loan. [4] annual interest repayment, excluding other operating expenses.