Exam Notes 2013:
Only Applicable Calculations for CH 1&9.
(Profit leverage effect, ABC Analysis & Determination of Costs)
Theory – SU Outcomes for CH 2,7,10 &12.
CHAPTER 1 (SU1) THE PURCHASING FUNCTION IN PERSPECTIVE
The importance of the purchasing function and effective purchasing and supply management for successful business
operations influence of efficient purchasing on:
Gegewe die volgende inligting, bereken wat die invloed van ‘n besparing op aankoopkoste sal wees op die wins van ‘n
onderneming: / Given the following information, calculate what the influence of a saving on purchasing cost will be on
the profit of a business:
Verkope / Sales R2 000 000
Koste van goedere verkoop / Cost of goods sold R1 120 000
Operasionele koste / Operating cost R 480 000
Besparing op aankoopkoste is 19% en aankope is 90% van koste van goedere verkoop. / Savings on purchasing cost
is 19% and purchasing is 90% of cost of goods sold.
Bepaal ook met hoeveel persent verkope sal moet toeneem om dieselfde effek op die netto wins te verkry. / Also
determine by what percentage sales should increase in order to have the same effect on the net profit.
VRAAG 2 / QUESTION 2 (±13)
Veronderstel ZeeZee designs se Junie-maand verkope was R1 340 000. Hul koste van verkope het R840 000 beloop, en
verkoop- en administratiewe koste R240 000. Oor die algemeen vorm aankoopkoste 70% van hul koste van verkope.
Bereken onderskeidelik wat die invloed van ‘n 10% en ‘n 15% besparing op aankope op ZeeZee se wins sal wees. Dui
ook aan wat hul netto wins persentasie was vir Junie, en hoe dit sal verskil indien die besparings intree. / Assume
ZeeZee designs’ June sales were R1 340 000. Their cost of sales was R840 000, and sales and administrative costs R240
000. In general, purchasing costs form 70% of their cost of sales. Calculate the influence of a 10% and a 15% saving on
ZeeZee’s profit. Indicate also what their net profit percentage was for June, and how this will differ if these savings were
applied.
VRAAG 3 / QUESTION 3 (±4)
Gebruik die inligting in Vraag 2 om te bereken met watse bedrag verkope moet toeneem om dieselfde effek op netto
wins te verkry as ‘n 15% besparing op aankope. / Use the information given in Question 2, and calculate by what amount
sales should increase to get the same effect on net profit as a 15% saving on purchases.
VRAAG 4 / QUESTION 4 (±13)
Veronderstel Pepi designs se September-maand verkope was R5 790 000. Hul koste van verkope het R2 140 000
beloop, en verkoop- en administratiewe koste R545 000. Oor die algemeen vorm aankoopkoste 65% van hul koste van
verkope. Bereken onderskeidelik wat die invloed van ‘n 10% en ‘n 15% besparing op aankope op Pepi se wins sal wees.
Dui ook aan wat hul netto wins persentasie was vir September, en hoe dit sal verskil indien die besparings intree. /
Assume Pepi designs’ September sales were R5 790 000. Their cost of sales was R2 140 000, and sales and
administrative costs R545 000. In general, purchasing costs form 65% of their cost of sales. Calculate the influence of a
10% and a 15% saving on Pepi’s profit. Indicate also what their net profit percentage was for September, and how this
will differ if these savings were applied.
NET PROFIT % 20% 29.58%
% INCREASE IN PROFIT 47.88%
Q1 - CALCULATIONS
PURCHASING COSTS = % x Cost Of Sales
= 90/100 x 1 120 000
=> 1 008 000
19% SAVING
Purchasing After Savings = Purchasing Costs - % Savings on Purchase/ Savings
1 008 000 – 19%(1 008 000)
=>1 008 000 – 191 520(Savings)
= R 816 480
Cost of Sales after savings = 1 120 000 – 191520
= R 928 480
Net Profit % = Net profit/Sales x100
Currently: 400 000/2 000 000 x100
= 20%
19% Savings: 591520/2 000 000 x100
= 29.58%
% Increase In Net Profit = New Net Profit – Old Net Profit/ Old Net Profit x 100
= 591 520 – 400 000/ 400 000 x 100
= 47.88%
% Sales should increase in order to have the same effect on Profit
New Profit/ Old Profit Net % = X Increase(X-Sales)/Sales x 100
X= 591 520/20%
= 591/.20
= 2957600 2 957 600 – 2 000 000/2 000 000 x100 = 47.88%
Net Profit % = Net profit/Sales x100
Currently: = 260 000/1 340 000 x 100
= 19.4%
10% Saving: =318 800/1 340 000 x 100 15% Saving: =348 200/1 340 000 x 100
=23.79% =25.99%
% Increase In Net Profit = New Net Profit – Old Net Profit/ Old Net Profit x 100
= 318 800-260 000/260 000 x 100 = 348 200 – 260 000/260 000 x 100
= 22.62% = 33.92%
% Sales should increase in order to have the same effect on Profit
New Profit/ Old Profit Net % = X Increase(X-Sales)/Sales x 100
X = 318 800/19.4% X = 348 200/ 19.4%
= 318 800/0.194 = 348 200/0.194
= 1 643 299 = 1 794 845
Net Profit % = Net profit/Sales x100
Currently: = 3 105 000/5 790 000 x 100
= 53.63%
10% Saving: = 3 244 100/5 790 000 x 100 15% Saving: =3 313 650/5 790 000 x 100
=56.03% =57.23%
% Increase In Net Profit = New Net Profit – Old Net Profit/ Old Net Profit x 100
= 3 244 100- 3 105 000/ 3 105 000x 100 = 3 313 652 – 3 105 000/ 3 105 000 x 100
= 4.48% = 6.72%
% Sales should increase in order to have the same effect on Profit
New Profit/ Old Profit Net % = X Increase(X-Sales)/Sales x 100
X = 3 244 100/53.63% X = 3 313 650/ 53.63 %
= 3 244 100/0.5363 = 3 313 650/0.5363
= 6049039.717 = 6 178 724.594
Explain the need for firms to hold various kinds of Illustrate the importance of inventory on the ROI of
inventory business enterprises
• Continuity in marketing and production • See calculations Study unit 1
• Inventory is calculated as % of Total assets bates
• Cost saving & preventing unstable pricing • ROI = Net profit
• Protect against uncertain supply Total assets
• More inventory = more total assets = less ROI%
• Purchasing cost • P. 7: 750000 = 10.5%
714000
• More inventory, more total assets: 750000 = 9.38%
800000
A Pareto-analysis (ABC-analysis) of a firm’s total Pareto’s 3 categories
inventory
• Class A: Presents 10% of the total amount of
• The ABC analysis’ primary objective is to units, but 70% of the Rand value.
provide management with info regarding the
importance of the various inventories’ • Class B: Presents 40% of the total amount of
monetary value. units, but 40% of the Rand value.
• Class C: Presents 50% of the total amount of
• Pareto uses % Rand value to classify inventory.
units, but 10% of the Rand value.
• Identify 3 categories.
Graphical illustration of the ABC analysis 2. Add the values of the previous column to obtain the
cumulative values. The total of the arranged column should
equal the last cumulative value of this column.
3. Calculate the % value, by dividing the values in the
cumulative column (column 4) with the total of column 3.
Multiply with 100 to obtain a %. Note: Except when
requested differently, these percentages should always be
rounded off to 2 decimals.
4. To determine the classification, use the % values as
calculated in step 4, and use Pareto’s / 10 rule to
identify the value % closest to 70%. All items up to this value
% are category A items. Use the value % of the last category
A item, and add 20% to it. All the items closest to this value
Steps at ABC analysis
% are category B items. The rest of the items are category C
1. Arrange the given value from high to low, items.
and add the column.
1. Conduct an ABC analysis, given the following information:
2. Conduct an ABC analysis, given the following information:
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