Question
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:
- Prevent stock shortages,
- Improve the gross margin on individual products,
- Improve the collection of receivables.
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