EXCELCENTRE LEARNING INSTITUTE 0846244729
PU E
SHI
NG Y L E NC
OU TO THE GATE OF EXC EL
Education is the most powerful weapon which you can use to change the world
,EXCELCENTRE LEARNING INSTITUTE 0846244729
WARNING: PLEASE NOTE THAT PLAGIARISM IS A SERIOUS ACADEMIC
OFFENSE, therefore students must use this document ONLY as a guideline. Hence
students have regenerated their own (personalized) solutions paying particular
attention to module contents as prescribed by module facilitators, lecturers and
supervisors. This document’s purpose is to compact all sources of information that
might be relevant to students’ assignments, hence additional knowledge on the
provided information is not restricted by the authors. However, submitting this
document as one’s final work is considered unethical, and students should be
penalized. If this document is plagiarized by the users and fails, EXCELCENTRE
should not be rendered accountable since the contents in this document only give
learners a kick-start on what is expected of them from their areas of
specialty.CAUTION: STUDENTS ARE NOT MANDATED TO USE EVERY DETAIL IN
THIS DOCUMENT IN WRITING THEIR ASSIGNMENT
Table of Contents
QUESTION 1 ............................................................................................................. 4
1.1.1 Economic order quantity .................................................................................... 4
1.1.2 The number of orders to be placed annually based on the economic order
quantity....................................................................................................................... 5
1.1.3 The total ordering costs and total carrying costs. .............................................. 5
1.2 REQUIRED .......................................................................................................... 6
QUESTION 2 REQUIRED ........................................................................................ 10
2.1.1 Percentage return on sales (net profit margin) (4 marks) ................................ 12
2.1.2 Percentage return earned by the shareholders (4 marks) ............................... 12
2.1.3 Debt to assets ratio (4 marks) ......................................................................... 13
2.1.4 Debt to equity ratio. (4 marks) ......................................................................... 13
Education is the most powerful weapon which you can use to change the world
,EXCELCENTRE LEARNING INSTITUTE 0846244729
QUESTION 3 (20 Marks) ......................................................................................... 15
3.1 REQUIRED ........................................................................................................ 15
3.2 REQUIRED ........................................................................................................ 17
3.2.1 The number of tests that need to be administered to break even. ................... 17
3.2.2 The fee that the racehorse owners should be charged for each test if an operating
profit of R900 000 per month is targeted by the laboratory. ...................................... 18
3.3 REQUIRED ........................................................................................................ 19
3.3.1 Break-even value ............................................................................................ 19
3.3.2 Sales value required to achieve an operating profit of R720 000. ................... 20
QUESTION 4 REQUIRED ........................................................................................ 20
QUESTION 5 (20 Marks) REQUIRED...................................................................... 25
5.1 Payback Period of Project A (expressed in years, months and days)................. 26
5.2 Accounting Rate of Return on initial investment of Project A .............................. 27
5.3 Net Present Value of both projects. .................................................................... 27
5.4 Internal Rate of Return of Project A. ................................................................. 28
Education is the most powerful weapon which you can use to change the world
, EXCELCENTRE LEARNING INSTITUTE 0846244729
QUESTION 1
1.1 REQUIRED Use the information given below to calculate the following:
Monthly sales: 3,750 units
Selling price per unit: R14
Purchase price: Cost plus 40% (meaning the selling price is 140% of cost)
Carrying cost: 10% of the unit purchase price
Ordering cost: R100 per order
1.1.1 Economic order quantity
Annual Demand (D)
Monthly sales = 3,750 units
Annual demand (D) = 3,750 × 12 = 45,000 units
Unit Purchase Price (P)
Selling price = R14 (which is 140% of cost)
14
So, cost (purchase price) = = 𝑅 10
1.4
Purchase price (P) = R10
Carrying Cost per Unit (H)
Carrying cost = 10% of purchase price = 0.10 × R10 = R1 per unit per year
Ordering Cost (S)
Ordering cost (S) = R100 per order
Education is the most powerful weapon which you can use to change the world
PU E
SHI
NG Y L E NC
OU TO THE GATE OF EXC EL
Education is the most powerful weapon which you can use to change the world
,EXCELCENTRE LEARNING INSTITUTE 0846244729
WARNING: PLEASE NOTE THAT PLAGIARISM IS A SERIOUS ACADEMIC
OFFENSE, therefore students must use this document ONLY as a guideline. Hence
students have regenerated their own (personalized) solutions paying particular
attention to module contents as prescribed by module facilitators, lecturers and
supervisors. This document’s purpose is to compact all sources of information that
might be relevant to students’ assignments, hence additional knowledge on the
provided information is not restricted by the authors. However, submitting this
document as one’s final work is considered unethical, and students should be
penalized. If this document is plagiarized by the users and fails, EXCELCENTRE
should not be rendered accountable since the contents in this document only give
learners a kick-start on what is expected of them from their areas of
specialty.CAUTION: STUDENTS ARE NOT MANDATED TO USE EVERY DETAIL IN
THIS DOCUMENT IN WRITING THEIR ASSIGNMENT
Table of Contents
QUESTION 1 ............................................................................................................. 4
1.1.1 Economic order quantity .................................................................................... 4
1.1.2 The number of orders to be placed annually based on the economic order
quantity....................................................................................................................... 5
1.1.3 The total ordering costs and total carrying costs. .............................................. 5
1.2 REQUIRED .......................................................................................................... 6
QUESTION 2 REQUIRED ........................................................................................ 10
2.1.1 Percentage return on sales (net profit margin) (4 marks) ................................ 12
2.1.2 Percentage return earned by the shareholders (4 marks) ............................... 12
2.1.3 Debt to assets ratio (4 marks) ......................................................................... 13
2.1.4 Debt to equity ratio. (4 marks) ......................................................................... 13
Education is the most powerful weapon which you can use to change the world
,EXCELCENTRE LEARNING INSTITUTE 0846244729
QUESTION 3 (20 Marks) ......................................................................................... 15
3.1 REQUIRED ........................................................................................................ 15
3.2 REQUIRED ........................................................................................................ 17
3.2.1 The number of tests that need to be administered to break even. ................... 17
3.2.2 The fee that the racehorse owners should be charged for each test if an operating
profit of R900 000 per month is targeted by the laboratory. ...................................... 18
3.3 REQUIRED ........................................................................................................ 19
3.3.1 Break-even value ............................................................................................ 19
3.3.2 Sales value required to achieve an operating profit of R720 000. ................... 20
QUESTION 4 REQUIRED ........................................................................................ 20
QUESTION 5 (20 Marks) REQUIRED...................................................................... 25
5.1 Payback Period of Project A (expressed in years, months and days)................. 26
5.2 Accounting Rate of Return on initial investment of Project A .............................. 27
5.3 Net Present Value of both projects. .................................................................... 27
5.4 Internal Rate of Return of Project A. ................................................................. 28
Education is the most powerful weapon which you can use to change the world
, EXCELCENTRE LEARNING INSTITUTE 0846244729
QUESTION 1
1.1 REQUIRED Use the information given below to calculate the following:
Monthly sales: 3,750 units
Selling price per unit: R14
Purchase price: Cost plus 40% (meaning the selling price is 140% of cost)
Carrying cost: 10% of the unit purchase price
Ordering cost: R100 per order
1.1.1 Economic order quantity
Annual Demand (D)
Monthly sales = 3,750 units
Annual demand (D) = 3,750 × 12 = 45,000 units
Unit Purchase Price (P)
Selling price = R14 (which is 140% of cost)
14
So, cost (purchase price) = = 𝑅 10
1.4
Purchase price (P) = R10
Carrying Cost per Unit (H)
Carrying cost = 10% of purchase price = 0.10 × R10 = R1 per unit per year
Ordering Cost (S)
Ordering cost (S) = R100 per order
Education is the most powerful weapon which you can use to change the world
