MAC1501 ASSESSMENT 2 SEM 2 OF 2025 EXPECTED ANSWERS

QUESTION 1: Calculation of Closing Inventory
(Weighted Average Method)



The weighted average cost is recalculated after each purchase. Issues to
production are valued at the current weighted average cost.


Inventory
Date Transaction Units Cost/Unit Total Cost
Balance


Units Cost/Unit Total Cost


1-Dec Opening Inventory 1,000 R 25.00 R 25,000

Issued to
5-Dec -400 R 25.00 (R 10,000) 600 R 25.00 R 15,000
Production

, 10-Dec Purchased 1,080 R 27.00 R 29,160 1,680 R 26.29 R 44,160


*R44,160/1,680
Weighted Avg Cost
*

Issued to
15-Dec -400 R 26.29 (R 10,516) 1,280 R 26.29 R 33,644
Production
Issued to
16-Dec -600 R 26.29 (R 15,774) 680 R 26.29 R 17,870
Production

20-Dec Purchase Return -200 R 27.00 (R 5,400) 480 R 25.98 R 12,470

Weighted Avg
R12,470
Cost


QUESTION 2:
Ratio Analysis
for Mmekwa Ltd
2.1 Current Ratio

The current ratio measures a company's ability to pay its short-term obligations. Mmekwa's ratio is
extremely high (11.1:1 in 2024, up from an already high 15.8:1 in 2023), far exceeding the industry
average of 3:1. This suggests the company is very liquid but may be holding excessive idle cash or
inventory, which is an inefficient use of assets that could be invested for growth.

2.2 Quick Ratio