SECTION A [60 MARKS] Answer ALL the questions in this section. QUESTION 1 (20 Marks) 1.1 REQUIRED Use the information provided below to prepare an extract of the statement of comprehensive income that includes the value of closing inventory as at 31 December 2022 and gross profit for the year ended December 2022 using the following methods of inventory valuation: 1.1.1 FIFO (5 marks) 1.1.2 Weighted average cost (5 marks) INFORMATION GH Suppliers had an inventory of 10 wallets at R50 each on 01 January 2022, the start of the financial year. During 2022 the following purchases and return were recorded: 75 wallets at R60 each were purchased on 20 February 2022. 25 wallets at R80 each were purchased on 25 August 2022. 10 wallets that were purchased on 25 August 2022 were returned to the supplier. During 2022, 50 wallets were sold at R80 each and 30 wallets were sold at R100 each. 1.2 REQUIRED Calculate the economic order quantity (EOQ) from the information provided below. (5 marks) INFORMATION The monthly demand for an item sold by Super Stores is 1 000 units. The cost is R6 per unit and the item is sold at cost price plus 50%. The ordering cost amounts to R25 per order and the holding cost per unit is equal to 10% of the unit cost of the item. 1.3 REQUIRED Use the information given below to determine the cost (as a percentage, expressed to two decimal places) to Ascot Traders of not accepting the discount. (5 marks) INFORMATION Max Wholesalers granted credit terms of 60 days to Ascot Traders but the wholesaler is prepared to allow a discount of 2.5% if the account is settled within 15 days. QUESTION 2 (20 Marks) 2.1 REQUIRED Use the information provided below to calculate the Accounting Rate of Return on average investment (expressed to two decimal places). (5 marks) INFORMATION The management of Unicorn Limited is presently appraising the production and sale of a new product. This would involve the purchase of a new machine with a cost price of R500 000. The machine is expected to have a useful life of six years and a scrap value of R100 000. Annual sales of the product are estimated to be 3 000 units at a selling price of R120 per unit. Expenses (including depreciation) are expected to amount to R80 per unit. 2.2 REQUIRED Use the information provided below to calculate the following: 2.2.1 Internal Rate of Return (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. (5 marks) 2.2.2 Payback Period (expressed in years, months and days) (3 marks) INFORMATION Mitre Limited is investigating the possibility of purchasing a machine for R180 000. The machine is expected to increase net cash flows by R50 000 per annum for five years. 2.3 REQUIRED Use the information provided below to determine the optimum mix of products that should be produced by Volex Limited. Also indicate the total contribution that would be earned. (7 marks) INFORMATION Volex Limited has only 2 500 machine hours available to produce three products viz. Product A, Product B and Product C. The following budgeted information relates to the three products for January 2024: Product A Product B Product C Sales price per unit R60 R75 R90 Variable costs per unit R36 R30 R60 Machine hours required per unit 4 hours 5 hours 2.5 hours Estimated sales demand 280 units 300 units 320 units QUESTION 3 (20 Marks) REQUIRED Use the information given below to calculate each of the following independently: 3.1 Expected total Marginal Income and Net Profit/Loss (4 marks) 3.2 Margin of safety (as a percentage; expressed to two decimal places) (4 marks) 3.3 Break-even quantity if the selling price drops by 10% (4 marks) 3.4 Break-even value using the marginal income ratio, if the company spends an additional R435 200 on salaries (4 marks) 3.5 Selling price per unit that will enable the company to achieve a net profit of R1 500 000 (4 marks) INFORMATION Slumber Limited manufactures beds. The following information was extracted from the budget for 2024: Expected production and sales (units) 1 200 Selling price per bed R6 000 Direct materials cost per bed R1 700 Direct labour cost per bed R860 Variable manufacturing overheads cost per bed R320 Fixed manufacturing overheads cost R1 084 800 Sales commission (as a percentage of the selling price) 20% Fixed administrative and selling costs R720 000 TOTAL: 60 MARKS