Accounting Grade 12 Paper 2 NSC November 2022 Memo (English)

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE GRADE 12 ACCOUNTING P2 NOVEMBER 2022 MARKING GUIDELINES MARKS: 150 MARKING PRINCIPLES: 1. Unless otherwise stated in the marking guidelines, penalties for foreign items are applied only if the candidate is not losing marks elsewhere in the question for that item (no penalty for misplaced item). No double penalty applied. 2. Penalties for placement or poor presentation (e.g. details) are applied only if the candidate is earning marks on the figures for that item. 3. Unless otherwise stated, give full marks for correct answer. If answer incorrect, mark workings. 4. If a pre-adjustment figure is shown as a final figure, allocate the part-mark as a working mark for that figure (not the method mark for the answer). Note: if figures are stipulated in memo for components of workings, these do not carry the method mark for final answer as well. 5. Unless otherwise indicated, the positive or negative effect of any figure must be considered to award the mark. If no + or – sign or bracket is provided, assume that the figure is positive. 6. Where indicated, part-marks may be awarded to differentiate between differing qualities of answers from candidates. 7. If candidates provide more that the required number of responses, inspect all responses to give benefit to the candidate. Penalties may be applied for foreign entries if earning full marks not related to Q (max -2 per Q). 8. This memorandum is not for public distribution; as certain items might imply incorrect treatment. The adjustments made are due to nuances in certain questions. 9. Where penalties are applied, the marks for that section of the question cannot be a final negative. 10. Where method marks are awarded for operation, marker must inspect reasonableness of answer. 11. Operation means 'check operation'. 'One part correct' means operation and one part correct. Note: check operation must be +, -, x, ÷ as per candidate’s calculation (if valid) or per memo. 12. In calculations, do not award marks for workings if numerator & denominator are swapped – this also applies to ratios. 13. In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect at least in part. Indicate with a. 14. Be aware of candidates who provide valid alternatives beyond the marking guidelines. Note that one comment could contain different aspects. 15. Codes: f = foreign item; p = placement/presentation. These marking guidelines consist of 10 pages. Copyright reserved Please turn over

Downloaded from hlayiso.com Accounting/P2 2 DBE/November 2022 NSC – Marking guidelines QUESTION 1 1.1 1.1.1 C  1.1.2 A  1.1.3 E  1.1.4 B  4 1.2 WEZA STITCHES 1.2.1 Calculate: Direct labour cost WORKINGS ANSWER (R40 x 1,6) 6 x (1 840 x R40) 230 x R64 441 600  + 14 720  + 35 328  if 8% of normal time 491 648  one part correct (441 600 x 108%) mark earned in workings OR: 476 928 + 14 720 four marks two marks Be alert to alternative arrangement for calculations 7 Calculate: Factory overhead cost Total before corrections 541 600 Insurance – 32 500 + 19 500 or 32 500 x 40% – 13 000 * Water and electricity – 54 000  + 63 000  + 9 000 * (126 000 x 2/4) TOTAL one part correct; 537 600  must include 541 600 * one part correct 6 Calculate: Total cost of production for 2022 WORKINGS ANSWER 652 800  + 491 648  + 537 600  R1 682 048  see 1.2.1 (DLC) see 1.2.1 (FOHC) one part correct 4 1.2.2 Annie is concerned that fixed costs increased to R806 400. Explain why she should not be concerned. Provide TWO points. Quote figures. TWO points   with comparative figures   The first two points must mention / imply economies of scale and may be combined for two valid points, with different comparative figures quoted.  Economies of scale was achieved due to an increase in production by 1 150 units / from 5 250 to 6 400 / 21,9%  Fixed costs per unit decreased by R25 / from R151 to R126 / by 16,6% (as fixed costs remain relatively stable / not influenced by the level of production )  Total fixed cost increased by R13 650 / from R792 750 to R806 400 / by 1,7% which is below the inflation rate. 4 Copyright reserved

Downloaded from hlayiso.com Accounting/P2 3 DBE/November 2022 NSC – Marking guidelines 1.2.3 Comment on whether the production staff deserves the production bonus that they received. Provide THREE points, with figures. THREE points    with figures (comparison)    Clear motivation for staff deserving the bonus; be alert to valid comments on why they do not deserve the bonus. Note that more than one point may be combined in a single statement e.g. Production and BEP Award marks accordingly.  Production increased from 5 250 to 6 400 units / by 1 150 units / by 21,9% POINT 1  BEP decreased from 6 954 to 6 156 / by 798 units / by 11,5%  The business made a profit on 244 units (or R31 964) compared to a loss on 1 704 units (or R194 256) last year.  Direct material cost per unit decreased from R128 to R102 /by POINT R26 / by 20,3%; an indication of good control / less wastage / 2 efficiency in production / better training  Direct labour cost per unit decreased from R95,00 to R76,82 / by R18,18 / by 19,1% (see 1.2.1 DLC); an indication that it is being well managed; meeting targets during normal time.  Overtime was limited to only 230 hours / 12,5% of normal time / 11,1% POINT of total hours spent in production (small proportion of time spent in 3 production / saving the company on overtime rates)  Decrease in total variable costs from R251 per unit to R244 / by R7,00 / 2,8% 6 1.2.4 Annie wants to improve her profit by R50 000 during the next financial year while maintaining costs. Calculate the additional units that must be produced to achieve this target. WORKINGS ANSWER 50 000 * 375 – 244  382 units  131 two marks one part correct; if mark earned in workings accept 381,7 units Numerator and denominator must be marked as such * one mark for 50 000 only (as a stand-alone figure) i.e. any adjustments ( +; – ; x) to this figure would make the numerator incorrect. 4 TOTAL MARKS 35 Copyright reserved

Downloaded from hlayiso.com Accounting/P2 4 DBE/November 2022 NSC – Marking guidelines QUESTION 2 2.1 VAT Calculate the VAT amount that must be paid to SARS for the VAT period ended 31 May 2022. WORKINGS ANSWER Mark one option only; inspect option that benefits the candidate. Be alert to alternative presentation for calculations.       55 785 + 5 070 – 6 240 + 5 400 – 2 460 – 4 680 (18 860 x 15/115) (31 200 x 15%) two marks two marks OR – 55 785 – 5 070 + 6 240 – 5 400 + 2 460 + 4 680 52 875  one part correct OR OR 6 240 55 785 55 785 6 240 2 460* 5 070* 5 070* 2 460* 4 680* 5 400* 5 400* 4 680* 52 875 52 875 66 255 66 255 66 255 66 255 * amounts may be in brackets in the opposite column (side). 9 2.2 STOCK VALUATION MOUNTAIN BIKES 2.2.1 Calculate the value of the closing stock on 28 February 2022, using the specific identification stock method. MODEL WORKINGS ANSWER KING R666 000 (62 + 250 - 2) PALO 310 one mark – 245 one mark R338 000  65  x R5 200  one part correct* (9 600 x 100/160) two marks GAMA 18  x R6 000  R108 000  one part correct* R1 112 000  TOTAL one part correct; must include 666 000 * if mark is earned in workings 9 Copyright reserved

Downloaded from hlayiso.com Accounting/P2 5 DBE/November 2022 NSC – Marking guidelines 2.2.2 Explain TWO different examples of how the division of duties could prevent an incident such as this from occurring again in the future. Part marks for incomplete/unclear/partial answers; An explanation of division of duties may be considered as an incomplete response. Any TWO valid examples or duties that can be divided or delegated   Accept practical examples provided by candidates Allocate each of the following tasks to different employees, whereby one person acts as a check for the other.  Ordering and receiving stock  Dispatching to sales and recording sales  Follow up on documentation and authorisation  Physical stock counts and reconciling to stock records;  Inspect all physical stock leaving the premises against documentation (order forms, invoices, delivery notes)  Controlling access to storage facilities / stock or store room. 4 2.2.3 Provide TWO points that show that Milo and his customers are happy with the quality of the Gama Bikes. Quote figures. TWO valid points   with figures    No (0) returns to suppliers (54 of King; 2 of Palo) is an indication of good quality.  Higher mark-up of 60% does not deter customers / prepared to pay higher price / appeals to a select market (other products uses 50% mark-up)  Highest sales revenue of R2 323 200 (R1 911 000 for Palo; R1 930 500 for King / R412 000 more than Palo; R392 500 more than King)  Lowest closing stock value; R108 000 see 2.2.1 and / or 18 units on hand / or 7% of available stock / 242 of 260 units were sold / or 93% of available stock sold  High turnover rate (13 times / 27 days) would prevent stock from becoming obsolete/ damaged/stolen/overtaken by newer models entering the market / cash not tied up in stock 4 POWDERED ENERGY DRINKS (1 kg TUBS) 2.2.4 Calculate the value of the closing stock on 28 February 2022, using the FIFO stock valuation method. WORKINGS ANSWER 180 – 30 150* x R483  R72 450 three marks (71 250 two marks + 1 200 one mark ) 150 x 475 150 x 8 R112 230  85 x R468  R39 780 two marks one part correct; 235 – figure used* (39 100 one m.mark + 680 one m.mark ) if mark is earned in 85 x 460 85 x 8 workings for stock value OR: R71 250 + R39 100 + R1 880 two marks one mark two marks Be alert to alternative presentations for calculations. 6 Copyright reserved

Downloaded from hlayiso.com Accounting/P2 6 DBE/November 2022 NSC – Marking guidelines 2.2.5 Calculate the stockholding period (in days) on 28 February 2022. Use the closing stock figure. WORKINGS ANSWER see 2.2.4 101,4 days  112 230  x 365 OR if Units are used: One part correct; if x 365 404 140  235 one mark x 365 Accept 101 days 925 one mark OR 92,7 days Mark numerator and denominator as such; do not mix Rands with units. Accept 93 days The stand-alone rule would apply to the numerator and denominator 3 2.2.6 Comment on your findings above. Provide TWO points, with figures. Note that the stockholding period for 2021 was 58 days. TWO valid comments   comparative figures  either with previous year or with shelf-life Note: comment and figures may be provided in the same statement; consider candidate’s points 1 and 2 together. Responses may vary depending on answer in 2.2.5 TWO valid comments : ONE mark each Be alert to valid alternative responses  The product is not selling / stock is selling at a slower rate than last year  Cash tied up in stock / working capital / may have liquidity issues.  This is a health product with a limited shelf-life / perishable / will end up being disposed or wasted. Relevant figures: TWO marks for figures / trend SHP increased from 58 days to 101,4 days / by 43,4 days OR from 58 days to 92,7 days / by 34,7 days OR more than 3 months on shelves OR the SHP is 35,4 days / 26,7 days above the shelf-life of 66 days. 4 2.2.7 Milo has noticed that some of the stock of energy drinks has exceeded the shelf life (sell-by date). Identify the value of stock that Milo is referring to. R39 780  see workings in 2.2.4 two marks or nothing Inspect: Must be the cost of the additional units from the Nov 2021 purchases 2 2.2.8 Milo wants to sell the outdated stock at half the cost price. What advice would you offer him about this proposal? Provide TWO points. TWO points of advice   part marks for incomplete/unclear/partial answers POINT 1 Be alert to comments that may not be an advice, or an advice being implied by the response.  Do not sell these product; it may create a poor image of the business / is hazardous to customers; consider the well-being or reaction of customers before making such proposals.  The business must absorb (write off) these products as a loss / destroy or dispose the outdated products and consider environmental issues.  Consider the long term consequences of unethical or illegal actions (legal POINT 2 action / lack of continued support / drop in sales / lose trading licence / face criminal charges for malpractice)  Customers / users must be informed of sell-by-date (if the goods are going to be sold or donated) or if not considered to be harmful. For ONE mark: Improve internal control measures to identify such cases in future. 4 TOTAL MARKS 45 Copyright reserved

Downloaded from hlayiso.com Accounting/P2 7 DBE/November 2022 NSC – Marking guidelines QUESTION 3 3.1 Creditors' Payment Schedule for December 2022 CREDIT NOVEMBER DECEMBER PURCHASES October 300 900 60 180 November 331 500 251 940 66 300  December 222 700  If x 80% x 95% 169 252  312 120 235 552  one part correct 7 3.2 Calculate the missing figures (i) to (iii) in the Cash Budget. NO. WORKINGS ANSWER Collection from debtors: December 2022 (i) 450 450  643 500 x 70% OR 193 050 x 70/30 (2) Rent income: December 2022 (15 000 / 60m) R250 one mark x 75m one mark 15 000  + 18 750  Be alert to alternative calculations, such as: (ii) 33 750  OR 15 000 one mark + (15 000 x 75/60) two marks one part correct* OR 15 000 one mark + (15 000 x 125%) two marks OR 15 000 one mark + (15 000 + 3 750) two marks OR 15 000 one mark x 225% two marks (4) OR R250 one mark x 135m two marks Salaries: November 2022 (55 595 – 14 840) two marks two marks one mark 39 000  (iii) 40 755  x 100/104,5  OR 40 755 – 1 755 one part correct* (4) * i.e. mark earned in workings 10 3.3.1 Calculate the deposit that will be paid for the purchase of the company vehicle during December 2022. WORKINGS ANSWER (20 800 x 24) two marks (499 200 two marks – 45 600 one mark) OR (18 900 x 24) three marks 151 200  one part correct; 453 600  x 25 / 75  if mark earned in workings 453 600 x 100/75 OR: 604 800 – 453 600 three marks one mark 5 Copyright reserved

Downloaded from hlayiso.com Accounting/P2 8 DBE/November 2022 NSC – Marking guidelines 3.3.2 Juanita is concerned about the cash position for December 2022. She proposes moving the purchase of the vehicle to January 2023. Use the table below to show the effect of this proposal to the December 2022 Cash Budget. Budgeted deficit on 31 December 2022 (120 000) Deposit on vehicle see 3.3.1 151 200  Monthly instalment (18 900 + 1 900) one mark 20 800  Fuel for company vehicle 7 500  Insurance 3 200  Cash deficit/surplus after the proposed move 62 700  one part correct Must include (120 000) 6 3.4 Juanita is concerned about her decisions in October 2022 to adjust the mark-up % and the amount actually spent on advertising. Provide TWO points to indicate whether these were wise decisions or not. Quote figures and/or calculations. ONE point on sales or gross profit  figure/s  ONE point on advertising  figure/s  The reduction in mark-up % led to:  Sales of 4 390 units more than budgeted / from 7 080 units to 11 470 units / by 62%. OR sales exceeded the budget by R247 446 (from POINT R584 100 to R831 546 or 42,4%) 1  Gross profit is more than budgeted by R27 966 or 12,2% (from R230 100 to R258 066) / cost of sales was more than budgeted as expected, due to more sales (by R219 480) Underspent on advertising by R12 000 (40 000 – 28 000) or by 30% was POINT not significant as it did not affect sales negatively / budgeted figure was 2 6,8% of sales, but actual amount used was 3,4% of sales. It could be argued that sales could have been higher if more was spent on advertising. 4 3.5.1 Explain why Juanita should be concerned about the actual amount spent on repairs and maintenance during October 2022. Quote a figure or a calculation. Figure (comparison)  Underspent on maintenance by R22 000 / spent only R8 000 of the R30 000 budget / 26,6% of the budget was used / 73,3% of budget was not used. Explanation for concern  accept short statements This could affect the long-run productivity of the assets / neglecting maintenance may cause disruptions to operations / cash savings in the short-run may cause fixed assets to break down or deteriorate, leading to greater expenses in the future. 2 Copyright reserved

Downloaded from hlayiso.com Accounting/P2 9 DBE/November 2022 NSC – Marking guidelines 3.5.2 James feels that there has been a lack of control over the amounts spent on delivery expenses and packing material. Explain whether James' opinion is correct or not. Provide calculations. Explanation (comparison with sales)  Figures  comparison of percentages or unit cost award ONE mark if only comparative figures (variances) are used. The delivery costs were well maintained; service provider was able to operate more efficiently in spite of increased sales:  Delivery expenses is 22,4% more than budgeted, but units sold is EXPLANATION more than budgeted by 62% / sales is 42,4% more than budgeted ON DELIVERY EXPENSES  Delivery cost per unit is R3,74 compared to the R4,95 budgeted.  Budgeted for 6% of sales actual was 5,2% of sales THREE mark option: comparison with sales quoting variances: Delivery expenses is over the budget by R7 850, but sales is more than budgeted by 4 390 units / by R247 446 ONE mark option: no comparison with sales but variances mentioned: Delivery expenses is over the budget by R7 850. Explanation (comparison with sales)  Figures  comparison of percentages or unit cost award ONE mark if only comparative figures (variances) are used. Packing material was efficiently managed / in line with the budget:  Packing material is 62% more than budgeted and units sold is also 62% more than budgeted / sales is 42,4% more than budgeted / EXPLANATION cost of sales is also 62% more than budgeted. ON PACKING MATERIAL  Unit cost of packing material was maintained at R3,30.  Budgeted for 4% of sales actual was 4,6% of sales THREE mark option: comparison with sales quoting variances: Packing material is over the budget by R14 486, but sales is more than budgeted by 4 390 units / by R247 446 ONE mark option: no comparison with sales but variances mentioned: Packing material is over the budget by R14 486. 8 3.6 Juanita wants to use social media to create an on-line shopping platform to increase her sales from January 2023. Name THREE additional payments that must be included in the January 2023 budget. Any THREE valid different examples of payments    Accept any relevant example, including existing payments that may have to be adjusted because of this venture. Possible examples. Be alert to examples not mentioned on this list EXAMPLE Establishment of a call centre / telephone lines 1 Additional couriers services / transport and carriage costs Additional delivery vehicles Computer, computer hardware, file server EXAMPLE Generator / inverter / UPS / solar panels 2 Increased salaries / for drivers, assistants, IT technician, staff Packaging costs / packing material Insurance Staff training EXAMPLE Data costs, fibre installations, internet cost 3 Software construction costs, website design Additional advertising IT maintenance 3 TOTAL MARKS 45 Copyright reserved

Downloaded from hlayiso.com Accounting/P2 10 DBE/November 2022 NSC – Marking guidelines QUESTION 4 4.1 4.1.1 True  4.1.2 False  4.1.3 False  3 4.2 BANK RECONCILIATION 4.2.1 CASH RECEIPTS JOURNAL CASH PAYMENT JOURNAL Amount Amount Total 101 200 Total 135 215 2 700  4 000  5 800  1 400  260  1 800  825  109 960  both totals 143 240 must include provisional totals 10 -1 (max -1) foreign / superfluous items (only if mark/s are earned elsewhere for the same figure) In awarding the method mark for totals, ensure that the candidate do not get full marks for including any incorrect figure/s. Indicate with a  (Principle 13) 4.2.2 Calculate the correct bank balance in the ledger on 31 July 2022. WORKINGS ANSWER (- 33 280 two method marks) 53 800 143 240 20 520  53 800  + 109 960  - 143 240  109 960 c/d 20 520 one part correct, see CRJ see CPJ 4 4.2.3 BANK RECONCILIATION STATEMENT ON 31 JULY 2022 Alternative DEBIT CREDIT Balance per Bank Statement 71 020 71 020  balancing figure balancing figure, could be DR Outstanding deposit (30 July) 29 500 29 500  Outstanding EFT No. 350 (4 200) 4 200  No. 351 (3 800) 3 800  Correction: Unitech College (72 000) 72 000  Balance as per Bank Account 20 520 20 520  could be CR -1 Presentation (inappropriate / no details provided); -1 foreign items / superfluous items, (only if mark/s are earned 100 520 100 520 elsewhere for the same figure) max -1 Candidates are expected to indicate DR and CR columns If DR and CR is not indicated, assume that the first column is Debit 8 TOTAL MARKS 25 TOTAL: 150 Copyright reserved