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Regarding inventory: There have been regular shortages of inventory. The most recent stocktake on 31 July 2022 once again revealed shortages of inventory. This shortage

Regarding inventory:

  • There have been regular shortages of inventory. The most recent stocktake on 31 July 2022 once again revealed shortages of inventory. This shortage consisted of 10 cartons of KEL685 and 8 cartons of AS330.

  • David is concerned that the gross margin on the individual products Tassie Packaging sells is insufficient. He would like a gross margin of at least 50% on each of the products the company sells. The gross margin information can be found below:

Tassie Packaging Pty Ltd

Individual Products Gross Margin

Product Code

Product Description

Unit of Measure

Unit Cost (GST exc)

Unit Selling Price (GST exc)

Gross Margin

AS330

Coffee cup lids

Carton

60.00

100.00

40%

KEL675

8oz biodegradable coffee cups

Carton

85.00

115.00

26%

KEL685

12oz biodegradable coffee cups

Carton

95.00

125.00

24%

MA121

600ml rectangular takeaway containers

Carton

45.00

75.00

40%

MA122

750ml rectangular takeaway containers

Carton

50.00

90.00

44%

PH022

Rectangular takeaway container lids

Carton

25.00

40.00

38%

Regarding receivables:

There have been issues with the timely collection of receivables. Some customers seem to be consistently slow in paying their invoices. All outstanding debtors currently have credit terms of 15 days after the invoice date (payment is due 15 days after the invoice date). No discount is provided for early payment.

The schedule of accounts receivable that was entered into Xero at 1 July 2022 showed the following:

Schedule of Accounts Receivable as at 30 June 2022

Account No.

Account Name

Amount ($)

R1002

Black Bean Espresso

Invoice 3501, due 05 July 2021

11,840

R1010

Tonys Bar and Grill

Invoice 3505, due 10 July 2021

8,300

R1020

Vesuvios Italian Ristorante

Invoice 3520, due 12 July 2021

7,910

R1030

Derwent River Cafe

Invoice 3535, due 13 July 2021

11,310

39,360

Not all of the debtors outstanding at 30 June 2022 have paid their invoice by the due date (the aged receivable summary produced on Xero at 31 July 2022 will show the current situation).

Required

The written report must address Davids concerns.

You must use the accounting information available regarding Tassie Packaging Pty Ltd to provide recommendations to David of the decisions he needs to make to:

  1. Prevent stock shortages,
  2. Improve the gross margin on individual products,
  3. Improve the collection of receivables.

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