Waec Model Questions Vol1 2022 Commerce Question 5

Practice essay / theory question 5 from the 2022 Waec Model Questions Vol1 Commerce examination. This question covers Retail Pricing, Break‑even Analysis, Discount Policy, Profit Calculation .

Waec Model Questions Vol1 2022 Commerce Essay / Theory
Topics: Retail Pricing Break‑even Analysis Discount Policy Profit Calculation
Question 5 WAEC_MODEL_QUESTIONS_VOL1 • 2022 • COMMERCE • essay

A retailer purchases a popular model of mobile phone from a wholesaler at a cost of ₦30,000 per unit. The retailer incurs fixed monthly costs of ₦450,000 (rent, salaries, etc.) and variable selling expenses of ₦2,000 per unit sold (advertising, utilities). The usual selling price is ₦45,000 per phone. The retailer offers a 5 % discount on the selling price to any customer who buys 20 units or more in a single purchase. The retailer expects to sell 150 units in a month.

Question Parts

( a )
Determine the break‑even quantity for the retailer (the smallest whole number of phones that must be sold in a month for total revenue to equal total cost).
( b )
If the retailer sells the expected 150 units in the month and the 5 % bulk discount is applied to all units, calculate the profit for the month.
( c )
The retailer is considering increasing the bulk discount to 7 %. Assuming the same sales volume of 150 units, determine the new profit and state the change in profit compared with the 5 % discount scenario.
( d )
Based on the calculations above, recommend a pricing strategy for the retailer that balances sales volume and profitability. Justify your recommendation in two to three sentences.

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About This Question

This is Waec Model Questions Vol1 2022 Commerce Question 5. It is one of the essay questions from the 2022 Waec Model Questions Vol1 Commerce examination.

The question covers Retail Pricing, Break‑even Analysis, Discount Policy, Profit Calculation .

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