bece model questions vol1 2020 business_studies | Practical

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Question 1 View Details
A student plans to start a small bakery that sells cupcakes. The following information is available: - Fixed costs (rent, utilities, salaries) per month: ₦120,000 - Variable cost per cupcake (ingredients, packaging): ₦250 - Expected selling price per cupcake: ₦500 - The student expects to sell at least 600 cupcakes in the first month. Using this information, answer the tasks below.
Question Parts
(a)
Calculate the break‑even point in units (number of cupcakes).
(b)
State the break‑even revenue (in ₦).
(c)
Identify which of the three cost categories (fixed, variable, total) is most controllable in the short run and justify your answer.
(d)
Suggest two practical ways the student could lower the break‑even point and briefly explain how each would affect the calculation.
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Question 2 View Details
A small trading firm purchased a photocopy machine on 1 January 2023 for ₦180,000. The machine is expected to have a useful life of 5 years and a residual value of ₦30,000. On 15 March 2023 the firm sold 150 units of office stationery to a client under the following terms: - Unit price: ₦2,200 - Quantity: 150 units - Trade discount: 5 % on the total price - Value Added Tax (VAT): 7.5 % applied on the net amount after discount - Payment terms: Cash on delivery Prepare the following:
Question Parts
(a)
Draw a correctly formatted sales invoice showing all required details (seller, buyer, description, quantity, unit price, discount, VAT, total payable).
(b)
Calculate the net amount payable by the client after applying the discount and adding VAT.
(c)
Record the transaction in the cash book (show the appropriate debit and credit entries).
(d)
Depreciation of the photocopy machine:
() Calculate the annual depreciation expense using the straight‑line method.
() Determine the book value of the machine at the end of 2 years.
() Briefly discuss how depreciation influences the firm’s profit and cash flow.
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Question 3 View Details
GreenLeaf Stores sold the following items on 15 March 2024. Unit prices are shown. The store offers a 5 % discount on the total invoice when the total before discount exceeds ₦20,000. After any discount, VAT at 7.5 % is added. The customer paid with a ₦70,000 note.
Question Parts
(a)
Calculate the total cost of the items before any discount.
(b)
Determine the discount amount (if any), the VAT payable, and the net amount payable after discount and VAT.
(c)
Calculate the change that must be given to the customer and comment on whether the invoice shows all required calculations.
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Question 4 View Details
Mrs. Ade, a junior manager, must write a formal letter to the supplier XYZ Ltd. requesting a revised quotation for office stationery because the previous quotation exceeds the budget. The letter must follow the standard business‑letter format and be clear and concise.
Question Parts
(a)
Identify and label the five essential parts of a formal business letter in the order they should appear.
(b)
Draft the body of the letter (excluding heading, date and closing) that clearly states the request, gives the reason, and asks for a response within seven days.
() Opening paragraph.
() Closing paragraph.
(c)
Discuss two common communication barriers that could affect the effectiveness of this letter and suggest one way to overcome each barrier.
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Question 5 View Details
Mrs. Okafor, the owner of a small printing business, is applying for a short‑term loan to purchase a new printing machine. The bank has asked her to provide the following information: **Bank statement (last 6 months)** | Month | Cash inflow (₦) | Cash outflow (₦) | |-------|----------------|-----------------| | 1 | 500,000 | 350,000 | | 2 | 480,000 | 360,000 | | 3 | 520,000 | 340,000 | | 4 | 510,000 | 355,000 | | 5 | 495,000 | 345,000 | | 6 | 505,000 | 350,000 | **Projected cash flow for the next 12 months (net cash flow after operating expenses, before any loan repayment)** | Month | Net cash flow (₦) | |-------|-------------------| | 1 | 150,000 | | 2 | 160,000 | | 3 | 155,000 | | 4 | 165,000 | | 5 | 158,000 | | 6 | 162,000 | | 7 | 170,000 | | 8 | 168,000 | | 9 | 175,000 | |10 | 172,000 | |11 | 180,000 | |12 | 178,000 | The bank’s loan terms are: - Maximum loan amount: ₦2,000,000 - Simple interest rate: 12% per annum - Repayment period: 12 months, equal monthly installments - Processing fee: 2% of the loan amount (paid once at loan approval) - Monthly account maintenance fee: ₦5,000 Answer the following questions:
Question Parts
(a)
Calculate the average monthly cash inflow, the average monthly cash outflow and the average monthly net cash flow for the six‑month bank statement.
(b)
From the projected cash flow, determine the total amount of cash that can be allocated to loan repayment over the 12‑month period if Mrs. Okafor will devote 30% of each month’s net cash flow to the loan.
(c)
Using the amount found in (b), calculate the maximum loan principal Mrs. Okafor can afford. (Recall that for simple interest the total amount repayable = Principal × (1 + r t), where r = 12% per annum and t = 1 year.)
(d)
For the loan amount obtained in (c), compute: (i) the processing fee, (ii) the total interest payable over the year, (iii) the total of the monthly maintenance fees for the 12 months, (iv) the overall cost of the loan (interest + processing fee + maintenance fees). Finally, advise whether taking the loan is financially viable if the business expects an annual revenue of ₦3,600,000 from the new machine and aims for a minimum net profit margin of 15%.
() Processing fee.
() Total interest payable.
() Total maintenance fees for 12 months.
() Overall cost of the loan.
() Viability assessment.
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