Gce Model Questions Vol1 2017 Commerce Question 3

Practice essay / theory question 3 from the 2017 Gce Model Questions Vol1 Commerce examination. This question covers Home Trade .

Gce Model Questions Vol1 2017 Commerce Essay / Theory
Topic: Home Trade
Question 3 GCE_MODEL_QUESTIONS_VOL1 • 2017 • COMMERCE • essay

A small retailer in Lagos purchases a batch of 1,200 units of a popular electronic gadget from a local wholesaler at a total cost of ₦720,000. The retailer adds a standard markup of 35 % on the cost price to determine the selling price per unit. Fixed overheads (rent, salaries, utilities) for the month amount to ₦150,000 and variable overheads (packaging, transport) are ₦20 per unit sold. The retailer offers a promotional discount of 5 % on the selling price for bulk purchases of 20 units or more.

Question Parts

( a )
Calculate the selling price per unit before any discount and the gross profit earned on each unit sold at this price.
( b )
Determine the break‑even quantity (number of units that must be sold) for the month, taking the discount into account for any sales of 20 units or more.
( c )
If the fixed overheads increase by 10 % during the next month, recalculate the break‑even quantity under the same discount policy.
( d )
Discuss the advantages and disadvantages of using a markup‑based pricing strategy compared with a profit‑margin based strategy for this retailer.

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About This Question

This is Gce Model Questions Vol1 2017 Commerce Question 3. It is one of the essay questions from the 2017 Gce Model Questions Vol1 Commerce examination.

The question covers Home Trade .

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