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Regarding inventory:

• There have been regular shortages of inventory. The most recent stocktake on 31 July 2022 once again revealed shortages of inventory. This shortage consisted of 10 cartons of KEL685 and 8 cartons of AS330.

• David is concerned that the gross margin on the individual products Tassie Packaging sells is insufficient. He would like a gross margin of at least 50% on each of the products the company sells. The gross margin information can be found below:

Tassie Packaging Pty Ltd Individual Products Gross Margin
Product Code	Product Description	Unit of Measure	Unit Cost (GST exc)	Unit Selling Price (GST exc)	Gross Margin
AS330	Coffee cup lids	Carton	60.00	100.00	40%
KEL675	8oz biodegradable coffee cups	Carton	85.00	115.00	26%
KEL685	12oz biodegradable coffee cups	Carton	95.00	125.00	24%
MA121	600ml rectangular takeaway containers	Carton	45.00	75.00	40%
MA122	750ml rectangular takeaway containers	Carton	50.00	90.00	44%
PH022	Rectangular takeaway container lids	Carton	25.00	40.00	38%

Regarding receivables:

There have been issues with the timely collection of receivables. Some customers seem to be consistently slow in paying their invoices. All outstanding debtors currently have credit terms of 15 days after the invoice date (payment is due 15 days after the invoice date). No discount is provided for early payment.

The schedule of accounts receivable that was entered into Xero at 1 July 2022 showed the following:

Schedule of Accounts Receivable as at 30 June 2022
Account No.	Account Name				Amount ($)
R1002	Black Bean Espresso	Invoice 3501, due 05 July 2021			11,840
R1010	Tonys Bar and Grill	Invoice 3505, due 10 July 2021			8,300
R1020	Vesuvios Italian Ristorante	Invoice 3520, due 12 July 2021			7,910
R1030	Derwent River Cafe	Invoice 3535, due 13 July 2021			11,310
					39,360

Not all of the debtors outstanding at 30 June 2022 have paid their invoice by the due date (the aged receivable summary produced on Xero at 31 July 2022 will show the current situation).

Required

The written report must address Davids concerns.

You must use the accounting information available regarding Tassie Packaging Pty Ltd to provide recommendations to David of the decisions he needs to make to:

1. Prevent stock shortages,
2. Improve the gross margin on individual products,
3. Improve the collection of receivables.

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