1.1 REQUIRED Use the information provided below to prepare the Pro-forma Statement of Comprehensive Income of Mentos Limited for the year ended 31 December 2024. Note: The statement must include the gross profit, operating profit, profit before tax and profit after tax. (10 marks) INFORMATION The following budgeted figures have been provided by Mentos Limited for the year ended 31 December 2023 : The following forecasts were made for 2024 : 1. Cash sales are expected to increase by 20% whilst credit sales are expected to increase by 30%. 2. The gross margin ratio is expected to increase by 5 percentage points. 3. Administrative and selling expenses will represent the same percentage of sales as for 2023 . 4. A new loan will be taken and the interest expense will increase by 30%. 5. The company tax is calculated as a percentage of the profit before tax and the tax rate is the same as 1.2 REQUIRED Prepare the production plan for each month of the quarter ending 31 March 2024. (6 marks) INFORMATION The information given below was supplied by Philips Enterprises: The expected sales for the period 01 December 2023 to 30 April 2024 are as follows : Production for each month equals 60% of the current month's projected sales and 40% of the following month's projected sales. REQUIRED Study the information given below and calculate the cost (as a percentage, expressed to two decimal places) to Oudtshoorn Stores of not accepting the discount. (4 marks) INFORMATION Jimbo Wholesalers' credit terms to Oudtshoorn Stores are 60 days but the supplier is prepared to allow a 2.5% rebate if Oudtshoorn Stores pays the account within 12 days. 2.1 REQUIRED Use the information given below to calculate the net value of issues to production for May 2023 and value of closing inventory as at 31 May 2023 using the following methods of inventory valuation: 2.1.1 First-in-first-out (5 marks) 2.1.2 Last-in-first-out (5 marks) 2.1.3 Weighted average cost. (Express the average cost per unit in rands and cents.) (5 marks) INFORMATION The following information for May 2023 was extracted from the records of Kens Limited, a manufacturing company, for a component used in production: REQUIRED Use the information given below to calculate the quantity that will minimise the total ordering and storage costs during 2024. (5 marks) INFORMATION Kip Enterprises intends purchasing 2000 units of product Yogo per week during 2024 at R52 per unit. The following additional costs are incurred: QUESTION 3 (20 MARKS) 5. Manufacturing overheads are paid monthly. The overheads are expected to amount to R65 000 for December 2023, including R5 000 for depreciation. Manufacturing overheads are expected to increase by 5% each month. 6. Labour costs amount to R6 per unit and are paid in the month in which they are incurred. Labour costs per unit are expected to increase by 9% with effect from 01 February 2024. 7. Materials cost R7 per unit (excluding any discounts). All the materials are purchased for cash to take advantage of a discount of 7.5%. 8. R200 000 is expected to be invested in a fixed deposit account on 01 February 2024. Interest at 9% per annum is receivable monthly, commencing February 2024. 9. Selling and administrative costs are paid monthly and are expected to total R56 000 for February 2024, after an increase of 12\% takes place on 01 February 2024. REQUIRED Use the information provided below to answer the following questions. Note: Use the formulas provided in the formula sheet only (that appear after QUESTION 5). Answers to the ratios must be expressed to two decimal places. 4.1 What percentage of the sales is made up of net income? (2 marks) 4.2 Calculate TWO (2) appropriate liquidity ratios and comment on the liquidity of the company. (6 marks) 4.3 Calculate the relevant ratios and comment on the effectiveness with which the company has employed the debtors and creditors. (6 marks) 4.4 Calculate TWO (2) appropriate ratios that would be used to assess the profitability of the company by examining the income from operations and the after-tax returns earned. Comment on your calculations. (6 marks) Comment on your calculations. INFORMATION Excerpts of financial data of Markram Limited for 2022 are as follows: Additional information - Ninety percent (90%) of the sales is on credit. - All purchases are on credit. - Credit terms to debtors are 60 days and credit terms from suppliers are 90 days. Note: Where discount factors are required, use only the present value tables (Appendix 1 and 2) that appear after the formula sheet. REQUIRED Study the information given below and answer the following questions: 5.1 Determine the Net Present Values of the two investment alternatives. (Show the calculations of the present values as well as the net present values.) (9 marks) 5.2 If both the net present values were negative, what advice would you offer Mustek Limited? (1 mark) 5.3 Calculate the Accounting Rate of Return on average investment of Option 2 (expressed to two decimal places). (5 marks) 5.4 Calculate the Internal Rate of Return (expressed to two decimal places) of Option 1. Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. (5 marks) INFORMATION Mustek Limited is planning a new business venture. With R3000000 available funds to invest, it is investigating two options: Option 1 is to acquire an exclusive contract to operate vending machines in municipal offices in a city for four years. The contract requires the firm to pay the city R2 000000 cash at the beginning. A once off payment of R300 000 is also required at the beginning for transportation and installation. The firm expects cash revenues from the operation to be R1 800000 per year and cash expenses to be R1 000000 per year. investigating two options: Option 1 is to acquire an exclusive contract to operate vending machines in municipal offices in a city for four years. The contract requires the firm to pay the city R2 000000 cash at the beginning. A once off payment of R300 000 is also required at the beginning for transportation and installation. The firm expects cash revenues from the operation to be R1 800000 per year and cash expenses to be R1 000000 per year. Option 2 is to operate a printing shop in a busy shopping mall. This option would require the company to spend R2 700000 for printing equipment that has an estimated useful life of four years, with a R400 000 salvage value. The cash revenues are expected to be R2 600000 per year and cash expenses are expected to be R1 700000 per year. Mustek Limited uses the straight-line method of depreciation. The company's cost of capital is 12%. FORMULA SHEET \begin{tabular}{|c|c|c|} \hline Gross profit & X & 100 \\ \hline Sales & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Profit after tax & X & 100 \\ \hline No. of ordinary shares issued & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Profit after tax & X & 100 \\ \hline Sales & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline - Dividends for the year & X & 100 \\ \hline No. of ordinary shares issued & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|} \hline Cost of sales \\ \hline Average inventory \\ \hline \end{tabular} \begin{tabular}{|c|} \hline Current assets \\ \hline Current liabilities \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Accounts receivable & X & 365 \\ \hline \multicolumn{1}{c|}{ Credit sales } & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|} \hline Current assets - Inventory \\ \hline Current liabilities \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Accounts payable & X & 365 \\ \cline { 1 - 1 } Credit purchases & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Total debt & X & 100 \\ \cline { 1 - 1 } \cline { 1 - 1 } Total assets & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Operating profit & X & 100 \\ \hline \multicolumn{1}{|c|}{ Total assets } & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Non-current debt & X & 100 \\ \cline { 1 - 1 } \cline { 1 - 1 } Equity & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Profit after tax & X & 100 \\ \hline \multicolumn{1}{|c|}{ Equity } & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|} \hline Operating profit \\ \hline Interest expense \\ \hline \end{tabular} APPENDIX 1: PRESENT VALUE OF R1 ADDFNIIX 2 - PRFSFNT VAI IIF OF A REGULAR ANNUITY OF R1 PER PERIOD FOR N PERIODS 1.1 REQUIRED Use the information provided below to prepare the Pro-forma Statement of Comprehensive Income of Mentos Limited for the year ended 31 December 2024. Note: The statement must include the gross profit, operating profit, profit before tax and profit after tax. (10 marks) INFORMATION The following budgeted figures have been provided by Mentos Limited for the year ended 31 December 2023 : The following forecasts were made for 2024 : 1. Cash sales are expected to increase by 20% whilst credit sales are expected to increase by 30%. 2. The gross margin ratio is expected to increase by 5 percentage points. 3. Administrative and selling expenses will represent the same percentage of sales as for 2023 . 4. A new loan will be taken and the interest expense will increase by 30%. 5. The company tax is calculated as a percentage of the profit before tax and the tax rate is the same as 1.2 REQUIRED Prepare the production plan for each month of the quarter ending 31 March 2024. (6 marks) INFORMATION The information given below was supplied by Philips Enterprises: The expected sales for the period 01 December 2023 to 30 April 2024 are as follows : Production for each month equals 60% of the current month's projected sales and 40% of the following month's projected sales. REQUIRED Study the information given below and calculate the cost (as a percentage, expressed to two decimal places) to Oudtshoorn Stores of not accepting the discount. (4 marks) INFORMATION Jimbo Wholesalers' credit terms to Oudtshoorn Stores are 60 days but the supplier is prepared to allow a 2.5% rebate if Oudtshoorn Stores pays the account within 12 days. 2.1 REQUIRED Use the information given below to calculate the net value of issues to production for May 2023 and value of closing inventory as at 31 May 2023 using the following methods of inventory valuation: 2.1.1 First-in-first-out (5 marks) 2.1.2 Last-in-first-out (5 marks) 2.1.3 Weighted average cost. (Express the average cost per unit in rands and cents.) (5 marks) INFORMATION The following information for May 2023 was extracted from the records of Kens Limited, a manufacturing company, for a component used in production: REQUIRED Use the information given below to calculate the quantity that will minimise the total ordering and storage costs during 2024. (5 marks) INFORMATION Kip Enterprises intends purchasing 2000 units of product Yogo per week during 2024 at R52 per unit. The following additional costs are incurred: QUESTION 3 (20 MARKS) 5. Manufacturing overheads are paid monthly. The overheads are expected to amount to R65 000 for December 2023, including R5 000 for depreciation. Manufacturing overheads are expected to increase by 5% each month. 6. Labour costs amount to R6 per unit and are paid in the month in which they are incurred. Labour costs per unit are expected to increase by 9% with effect from 01 February 2024. 7. Materials cost R7 per unit (excluding any discounts). All the materials are purchased for cash to take advantage of a discount of 7.5%. 8. R200 000 is expected to be invested in a fixed deposit account on 01 February 2024. Interest at 9% per annum is receivable monthly, commencing February 2024. 9. Selling and administrative costs are paid monthly and are expected to total R56 000 for February 2024, after an increase of 12\% takes place on 01 February 2024. REQUIRED Use the information provided below to answer the following questions. Note: Use the formulas provided in the formula sheet only (that appear after QUESTION 5). Answers to the ratios must be expressed to two decimal places. 4.1 What percentage of the sales is made up of net income? (2 marks) 4.2 Calculate TWO (2) appropriate liquidity ratios and comment on the liquidity of the company. (6 marks) 4.3 Calculate the relevant ratios and comment on the effectiveness with which the company has employed the debtors and creditors. (6 marks) 4.4 Calculate TWO (2) appropriate ratios that would be used to assess the profitability of the company by examining the income from operations and the after-tax returns earned. Comment on your calculations. (6 marks) Comment on your calculations. INFORMATION Excerpts of financial data of Markram Limited for 2022 are as follows: Additional information - Ninety percent (90%) of the sales is on credit. - All purchases are on credit. - Credit terms to debtors are 60 days and credit terms from suppliers are 90 days. Note: Where discount factors are required, use only the present value tables (Appendix 1 and 2) that appear after the formula sheet. REQUIRED Study the information given below and answer the following questions: 5.1 Determine the Net Present Values of the two investment alternatives. (Show the calculations of the present values as well as the net present values.) (9 marks) 5.2 If both the net present values were negative, what advice would you offer Mustek Limited? (1 mark) 5.3 Calculate the Accounting Rate of Return on average investment of Option 2 (expressed to two decimal places). (5 marks) 5.4 Calculate the Internal Rate of Return (expressed to two decimal places) of Option 1. Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. (5 marks) INFORMATION Mustek Limited is planning a new business venture. With R3000000 available funds to invest, it is investigating two options: Option 1 is to acquire an exclusive contract to operate vending machines in municipal offices in a city for four years. The contract requires the firm to pay the city R2 000000 cash at the beginning. A once off payment of R300 000 is also required at the beginning for transportation and installation. The firm expects cash revenues from the operation to be R1 800000 per year and cash expenses to be R1 000000 per year. investigating two options: Option 1 is to acquire an exclusive contract to operate vending machines in municipal offices in a city for four years. The contract requires the firm to pay the city R2 000000 cash at the beginning. A once off payment of R300 000 is also required at the beginning for transportation and installation. The firm expects cash revenues from the operation to be R1 800000 per year and cash expenses to be R1 000000 per year. Option 2 is to operate a printing shop in a busy shopping mall. This option would require the company to spend R2 700000 for printing equipment that has an estimated useful life of four years, with a R400 000 salvage value. The cash revenues are expected to be R2 600000 per year and cash expenses are expected to be R1 700000 per year. Mustek Limited uses the straight-line method of depreciation. The company's cost of capital is 12%. FORMULA SHEET \begin{tabular}{|c|c|c|} \hline Gross profit & X & 100 \\ \hline Sales & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Profit after tax & X & 100 \\ \hline No. of ordinary shares issued & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Profit after tax & X & 100 \\ \hline Sales & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline - Dividends for the year & X & 100 \\ \hline No. of ordinary shares issued & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|} \hline Cost of sales \\ \hline Average inventory \\ \hline \end{tabular} \begin{tabular}{|c|} \hline Current assets \\ \hline Current liabilities \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Accounts receivable & X & 365 \\ \hline \multicolumn{1}{c|}{ Credit sales } & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|} \hline Current assets - Inventory \\ \hline Current liabilities \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Accounts payable & X & 365 \\ \cline { 1 - 1 } Credit purchases & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Total debt & X & 100 \\ \cline { 1 - 1 } \cline { 1 - 1 } Total assets & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Operating profit & X & 100 \\ \hline \multicolumn{1}{|c|}{ Total assets } & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Non-current debt & X & 100 \\ \cline { 1 - 1 } \cline { 1 - 1 } Equity & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Profit after tax & X & 100 \\ \hline \multicolumn{1}{|c|}{ Equity } & & 1 \\ \hline \end{tabular} \begin{tabular}{|c|} \hline Operating profit \\ \hline Interest expense \\ \hline \end{tabular} APPENDIX 1: PRESENT VALUE OF R1 ADDFNIIX 2 - PRFSFNT VAI IIF OF A REGULAR ANNUITY OF R1 PER PERIOD FOR N PERIODS