Summary Assignment 1 and 2 2021 download to be graded A results

INTRODUCTION This tutorial letter contains the answers to Assignments 01 and 02, as well as the format of the examination paper. 2 GUIDELINES ON ANSWERING ASSIGNMENT 01 Assignment 01 was compulsory, which means you had to submit it to gain admission to the examination. Your marks for both Assignments 01 and 02 will contribute to your semester mark. The correct options for the multiple-choice questions, an explanation for these answers and the appropriate chapters in the prescribed book are indicated below. The questions from TL101 are included to facilitate following the answers. You can expect similar questions in the examination. Question 1 Which one of the following factors directly contributes to lower total cost? [1] innovation [2] improved customer lead time [3] lower inventory cost [4] improved quality Answer: 3, p.10-11. Lower inventory cost (option 3) and lower carrying cost are seen as major and direct contributors to lower total cost. All options above apart from option 3 directly contribute to increased sales, and not lower cost; in fact, options 1, 2 and 4 could even increase costs. Innovation (option 1) increases sales since it allows an organisation to get new products and technology to markets faster than its competitors. Improved customer lead times (option 2) improves sales by making products available to consumers at the right time and place. Improved quality (option 4) often drives brand preference and loyalty, which increases sales. Question 2 Which one of the following describes the asset turnover rate? [1] A measure of how efficiently assets have been employed [2] Total income from sales minus costs [3] A measure of the profit percentage out of each rand’s turnover [4] Profit margin multiplied by turnover rate of assets Answer: 1, p.11-12. Option 1 is correct, since the asset turnover rate, which is calculated by turnover divided by total assets, is a measure of how efficiently assets have been employed (i.e., how many times each rand’s worth of assets provided turnover). Option 2 is incorrect as the total income from sales (turnover) minus costs is the net income. Option 3 is incorrect as the profit percentage out of each rand’s turnover describes the profit margin. Option 4 describes the formula for 4 calculating return on investment, which is the profit margin multiplied by the turnover rate of assets. Question 3 What is the return on investment (ROI) if an organisation shows a nett income of R4 million, profit margin of 12%, total assets worth R2 million, sales at R8 million and an asset turnover rate of 2? [1] 24% [2] 50% [3] 30% [4] 19% Answer: Option 1, p 12. Return on investment (ROI) is calculated by multiplying the profit margin of 12% by the asset turnover rate of 2. Options 2, 3 and 4 are subsequently incorrect.