QUESTION $1(20$ Marks$)$

REQUIRED

Use the information provided below to prepare the Pro$-$Forma Statement of Comprehensive Income for July and

August $2021($using separate monetary columns for each month$).$

INFORMATION

The budgeted Statement of Comprehensive Income of Ryobi Enterprises for the year ended $30$ June $2021$ is as

follows:

R

Sales $3000000$

Cost of sales $(2000000)$

Gross profit $1000000$

Rent income $108000$

$1108000$

Operating expenses $(720000)$

Salaries $360000$

Advertising $120000$

Bad debts $60000$

Depreciation $30000$

Other operating expenses $150000$

Operating profit $388000$

Interest expense $(38000)$

Net profit $350000$

Additional information

$1.$ Sales for the period $01$ April to $30$ June $2021$ are budgeted at R$240000$ per month. Sales for July $2021$

are expected to be $5\%$ greater than the sales for June $2021.$ A decrease of $10\%$ is expected during

August $2021$ on the July $2021$ sales.

$2.$ Cash sales account for $40\%$ of the total sales, with the balance of the sales on credit. Five percent $(5\%)$

of the credit sales are expected to be irrecoverable and these are written off three months after the sale.

$3.$ The existing mark$-$up percentage on cost will be maintained during July and August $2021.$

$4.$ The rental agreement makes provision for an increase of $12\%$ each year, effective from $01$ July.

$5.$ Salaries are expected to increase by $10\%$ with effect from $01$ August $2021.$

$6.$ The amount spent on advertising each month is calculated as a percentage of sales. The percentage

for the period ended $30$ June $2021$ will be maintained in the next financial year.

$7.$ Depreciation for the year ended $30$ June $2021$ was calculated as a percentage on the cost price of the

equipment, R$200000.$ New equipment with a cost price R$60000$ will be purchased on $01$ July $2021.$

$8.$ Other operating expenses are spread evenly throughout the year and are expected to remain

unchanged in the new financial year.

$9.$ Repayments towards the loan will result in interest expense dropping by $10\%$ per month. Interest

expense for June $2021$ is R$3000.$

vmc

QUESTION $2(20$ Marks$)$

$2\mathrm{.}1$ REQUIRED

Use the information provided below to calculate the total value of issues to the production department for

May $2020$ and value of closing inventory as at $31$ May $2020$ using the:

$2\mathrm{.}1\mathrm{.}1$ First$-$in$-$first$-$out $($FIFO$)$ method. $(5$ marks$)$

$2\mathrm{.}1\mathrm{.}2$ Weighted average cost method.

$($Note: Round off the weighted average cost per unit to the nearest cent.$)(5$ marks$)$

INFORMATION

The following information was extracted from the records of Oasis Limited, a manufacturing company, for an inventory

item:

Date Transaction details for May $2020$

$01$

$06$

$08$

$20$

$31$

Opening inventory consisted of $9000$ units at R$10$ each $($including carriage on purchases$).$

An invoice was received for $35000$ units purchased from JH Manufacturers at R$10$ each. Carriage on

purchases of R$1$ per unit was paid to GH Logistics.

Returned $4000$ damaged units $($purchased on $06$ May $2020)$ to the supplier. A refund was received on the

carriage on purchases.

An invoice was received for $10000$ units purchased from JH Manufacturers at R$11$ each. Carriage on

purchases of R$1$ per unit was paid to GH Logistics.

Issues to the production department for May: $39000$ units.

$2\mathrm{.}2$ REQUIRED

Use the information provided below to calculate the annual Economic Order Quantity $($EOQ$)(5$ marks$)$

INFORMATION

The monthly sale of an item is $900$ units. The selling price per unit is R$7\mathrm{.}50$ and the item is sold at cost plus $50\%.$

The ordering cost amounts to R$20$ per order and the holding cost per unit is equal to $10\%$ of the unit cost of the item.

$2\mathrm{.}3$ REQUIRED

Use the following information to calculate the cost $($as a percentage$)$ to Imballito Traders of

not accepting the discount. $(5$ marks$)$

INFORMATION

Imballito Traders purchased goods from Bigmax Wholesalers for R$2000$ but the supplier is willing to accept R$1950$ if

the account is settled within $10$ days. Bigmax Wholesalers$$ usual credit terms to Imballito Traders are $60$ days.

vmc

QUESTION $3(20$ Marks$)$

Note: Where applicable, use the present value tables provided in APPENDICES $1$ and $2$ that appear

after question $5.$

REQUIRED

Use the information provided below to answer the following questions:

$3\mathrm{.}1$ Calculate the Payback Period of Project B $($answer expressed in years, months and days$).(3$ marks$)$

$3\mathrm{.}2$ Calculate the Accounting Rate of Return $($on average investment$)$ of Project A $($answer

expressed to two decimal places$).(5$ marks$)$

$3\mathrm{.}3$ Calculate the Benefit Cost Ratio of both projects $($answers expressed to three decimal

places$).(6$ marks$)$

$3\mathrm{.}4$ Refer to your answers in question $3\mathrm{.}3.$ Which project should be chosen? Why? $(1$ mark$)$

$3\mathrm{.}5$ Calculate the Internal Rate of Return of Project A$,$ assuming that it has no scrap value

$($answer expressed to two decimal places$).(5$ marks$)$

INFORMATION

Mellou Limited has the option to invest in Project A or Project B$,$ since finance is only available to invest in one

of them. You are given the following projected dat