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WAEC Commerce 2014 Paper

Question : 16

Total: 50

Use the information above to answer the following question.

Solution:

Concept:

Rate of turnover, or stock turnover ratio, shows how many times the average stock is sold within a period.

Explanation:

First, calculate the cost of goods sold (COGS):

\text{COGS} = \text{Opening stock} + \text{Purchases} - \text{Closing stock}

\text{COGS} = 6{,}000 + 23{,}000 - 8{,}000 = 21{,}000

Next, find the average stock:

\text{Average stock} = \frac{\text{Opening stock} + \text{Closing stock}}{2}

\text{Average stock} = \frac{6{,}000 + 8{,}000}{2} = 7{,}000

Now apply the rate of turnover formula:

\text{Rate of turnover} = \frac{\text{COGS}}{\text{Average stock}}

\text{Rate of turnover} = \frac{21{,}000}{7{,}000} = 3.0 \text{ times}

Salaries and wages are not used in this calculation.

Answer:

C. 3.0 times

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