Practice gce model questions vol1 commerce 2018 Past Questions

Question 1 View Details

An logistics company transports goods from City A to City B (180 km) and then to City C (260 km). For each consignment there is a fixed loading cost of £120. The variable cost per kilometre is £0.45 for the first 200 km of the whole journey and £0.30 for each kilometre thereafter (fuel discount). The client will receive a 10 % discount on the quoted flat rate if the total distance exceeds 400 km. What is the minimum flat rate (in pounds) that the company should quote before any discount so that, after the possible discount, the revenue covers the total cost? Give your answer to two decimal places.

Correct A. £313.34

B. £300.00

C. £320.50

D. £295.75

Correct Answer: A

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Question 2 View Details

A wholesaler purchases a batch of 500 units of a product whose supplier's list price is ₦2 500 per unit. The supplier offers a trade discount of 12 % on the list price and, if payment is made within 10 days, an additional cash discount of 2 % on the already discounted price. The wholesaler intends to set a retail price (list price to retailers) that includes a markup of 30 % on his own cost price. However, for orders of more than 200 units the wholesaler gives retailers a seasonal promotion of 5 % off this retail price. Determine the minimum retail price per unit (before the seasonal promotion) that the wholesaler must set so that, after the promotion, his profit on each unit is at least 20 % of his cost price. Give your answer in naira to two decimal places.

A. ₦2 700.00

B. ₦2 680.12

C. ₦2 750.45

Correct D. ₦2 723.37

Correct Answer: D

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Question 3 View Details

A retailer sells a product with an average weekly demand of 120 units. Weekly demand is normally distributed with a standard deviation of 30 units. The supplier's lead time is 10 days (≈1.43 weeks). The retailer wishes to maintain a 95 % service level (i.e., the probability of not stocking out during lead time). The unit cost of the product is ₦500 and the holding cost is 20 % of the unit cost per year. The ordering cost per order is ₦1 200. Calculate (a) the Economic Order Quantity (EOQ) and (b) the Re‑order Point (ROP) that the retailer should use. Round the EOQ to the nearest whole unit and the ROP to the nearest whole unit.

A. EOQ = 420 units, ROP = 250 units

B. EOQ = 400 units, ROP = 260 units

Correct C. EOQ = 387 units, ROP = 230 units

D. EOQ = 350 units, ROP = 210 units

Correct Answer: C

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Question 4 View Details

A warehouse stores two products, A and B. The unit cost of A is ₦800 and its annual holding cost rate is 15 %; the unit cost of B is ₦500 and its annual holding cost rate is 10 %. The annual ordering cost for a joint order (containing both products) is ₦2 000, irrespective of the quantities ordered. Annual demand is 9 600 units for A and 4 800 units for B. The warehouse has a total storage capacity of 12 000 units (combined A and B). Assuming that the two products are ordered together in each joint order and that the proportion of each product in the order must reflect its proportion of total annual demand, determine the order quantities $Q_A$ and $Q_B$ (in units) that minimise the total annual inventory cost (holding + ordering) while satisfying the capacity constraint $Q_A+Q_B\le12 000$. Give your answer as the nearest whole unit for each product.

Correct A. Q_A = 515 units, Q_B = 257 units

B. Q_A = 480 units, Q_B = 240 units

C. Q_A = 540 units, Q_B = 270 units

D. Q_A = 500 units, Q_B = 260 units

Correct Answer: A

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Question 5 View Details

An insurance company offers a fire insurance policy with a sum insured of ₦5 000 000 for a small business. Historical data shows that the probability of a fire claim in a year is 0.004 and, if a claim occurs, the average claim amount is 80 % of the sum insured. The company adds a loading of 25 % to the pure premium to cover administrative expenses and profit. The regulator, however, caps the premium at 0.6 % of the sum insured. What is the maximum premium (in naira, to the nearest naira) that the company can charge while satisfying both the loading requirement and the regulatory ceiling?

A. ₦36 000

B. ₦24 000

C. ₦28 000

Correct D. ₦30 000

Correct Answer: D

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Question 6 View Details

A trader purchases a batch of 120 identical items for a total cost of ₦48,000. He sells 90 items at a price of ₦500 each and the remaining 30 items at a price of ₦450 each. Calculate his overall profit percentage on the whole batch.

A. 23.61 %

B. 19.44 %

Correct C. 21.88 %

D. 20.00 %

Correct Answer: C

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Question 7 View Details

A company's annual demand for a product is 12,000 units, assumed constant. The lead time for replenishment is 10 days. Demand during lead time follows a normal distribution with mean equal to the expected demand over the lead time and standard deviation equal to 5 % of that mean. The firm desires a 95 % service level (z‑value ≈ 1.645). The unit cost is ₦200, the holding cost is 20 % of unit cost per year, and the ordering cost is ₦1,500 per order. A stock‑out incurs a penalty of ₦500 per unit short. Determine (a) the economic order quantity (EOQ), (b) the reorder point including safety stock, and (c) the total annual cost (ordering + holding + stock‑out penalty). Express the total cost in naira to the nearest naira.

Correct A. EOQ ≈ 949 units; Reorder point ≈ 356 units; Total annual cost ≈ ₦41,170

B. EOQ ≈ 900 units; Reorder point ≈ 370 units; Total annual cost ≈ ₦42,300

C. EOQ ≈ 1,020 units; Reorder point ≈ 340 units; Total annual cost ≈ ₦40,500

D. EOQ ≈ 1,050 units; Reorder point ≈ 380 units; Total annual cost ≈ ₦39,800

Correct Answer: A

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Question 8 View Details

A small business needs ₦2,000,000 for 18 months. It can obtain financing by either (A) a bank loan with a nominal annual interest rate of 12 % payable monthly and a 2 % arrangement fee on the principal, or (B) an overdraft facility charged at 1.5 % per month on the average daily balance, with no fees but a minimum monthly repayment of ₦150,000. Assuming the full amount is drawn at the start and equal monthly repayments are made over the 18‑month period, which option results in the lower total cost? Calculate the total cost (interest plus any fees) for each option and state the cheaper one.

A. Option A is cheaper; total cost A = ₦240,000, total cost B = ₦260,000

B. Option B is cheaper; total cost A = ₦235,280, total cost B = ₦230,000

Correct C. Option A is cheaper; total cost A = ₦235,280, total cost B = ₦250,000

D. Option A is cheaper; total cost A = ₦225,000, total cost B = ₦250,000

Correct Answer: C

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Question 9 View Details

A retailer sells two types of gadgets. Gadget X has a cost price of ₦3,200 and is sold with a markup of 30 % on cost. Gadget Y has a cost price of ₦4,500 and is sold with a markup of 20 % on cost. During a seasonal promotion a discount of 10 % is applied to the selling price of both gadgets, after which a value‑added tax (VAT) of 7.5 % is added to the discounted price (VAT is collected from customers and passed on, so it does not affect profit). If the retailer sells 150 units of X and 80 units of Y during the season, calculate the total profit earned.

A. ₦115,200

Correct B. ₦110,400

C. ₦105,600

D. ₦98,000

Correct Answer: B

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Question 10 View Details

Three partners A, B and C start a partnership with capital contributions of ₦500,000, ₦300,000 and ₦200,000 respectively. The partnership agreement provides for interest on capital at 8 % per annum to be paid to each partner, and a fixed salary of ₦50,000 per month to partner A for managerial duties. After paying interest and salary, the net profit for the year is ₦720,000. Determine the amount of the remaining profit each partner receives when it is divided in the ratio of their capital contributions. Also state the total amount each partner receives including interest, salary (where applicable) and profit share.

A. Remaining profit shares - A: ₦320,000, B: ₦192,000, C: ₦128,000; Total received - A: ₦360,000, B: ₦216,000, C: ₦144,000

B. Remaining profit shares - A: ₦295,000, B: ₦177,000, C: ₦118,000; Total received - A: ₦385,000, B: ₦201,000, C: ₦134,000

C. Remaining profit shares - A: ₦30,000, B: ₦18,000, C: ₦12,000; Total received - A: ₦670,000, B: ₦42,000, C: ₦28,000

Correct D. Remaining profit shares - A: ₦20,000, B: ₦12,000, C: ₦8,000; Total received - A: ₦660,000, B: ₦36,000, C: ₦24,000

Correct Answer: D

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Question 11 View Details

A company's shares are currently trading at $\text{₦}150$ each. The company announces a rights issue where each shareholder can purchase one new share for every two shares they already hold at a subscription price equal to 80 % of the current market price. After the rights issue the theoretical ex‑rights price is expected to fall to this value, and then market sentiment is projected to lift the share price by 4 %. The company also pays an annual dividend equal to 5 % of the nominal value of $\text{₦}100$ per share. Calculate the dividend yield (as a percentage) based on the share price after the rights issue and the anticipated 4 % increase.

A. 2.95

B. 3.78

C. 4.12

Correct D. 3.43

Correct Answer: D

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Question 12 View Details

A home‑based trader purchases 120 units of a product for a total of $\text{₦}48\,000$. She sells 30 % of the units at a 25 % profit on cost and the remaining units at a 15 % profit on cost. A sales tax of 5 % is charged on the selling price of each unit sold. Determine the trader's overall net profit percentage on the total cost after tax.

Correct A. 12.1

B. 10.5

C. 13.4

D. 14.8

Correct Answer: A

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Question 13 View Details

An advertising agency plans a campaign using TV and radio. TV spots cost $\text{₦}200$ per GRP and deliver 0.8 GRP per thousand viewers; radio spots cost $\text{₦}120$ per GRP and deliver 0.5 GRP per thousand listeners. The campaign must achieve at least 1 500 GRPs in total, with at least 40 % of the total GRPs coming from TV, and the total budget cannot exceed $\text{₦}250\,000$. Find the minimum numbers of TV GRPs and radio GRPs that satisfy all constraints and state the total cost.

Correct A. TV GRPs = 600, Radio GRPs = 900, Total cost = 228000

B. TV GRPs = 700, Radio GRPs = 800, Total cost = 236000

C. TV GRPs = 800, Radio GRPs = 800, Total cost = 256000

D. TV GRPs = 500, Radio GRPs = 1000, Total cost = 220000

Correct Answer: A

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Question 14 View Details

A company receives an invoice for $\text{₦}250\,000$ payable in 30 days. It can either discount the invoice at a bank that charges a discount rate of 12 % per annum on the face value and a flat processing fee of $\text{₦}2\,500$, or obtain a short‑term loan from a finance house at 10 % per annum simple interest calculated on the actual 30‑day period. Which option is cheaper for the company and by how much (in naira)?

A. Discount is cheaper by ₦1500

B. Loan is cheaper by ₦5000

C. Discount is cheaper by ₦2911

Correct D. Loan is cheaper by ₦2911

Correct Answer: D

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Question 15 View Details

A trader imports 50 kg of cocoa beans at a purchase price of $\text{₦}1\,200$ per kilogram. Freight charges amount to $\text{₦}5\,000$ and customs duty is 8 % of the value of the goods (excluding freight). The trader then sells the beans at a 20 % profit on the total landed cost. What is the selling price per kilogram (in naira)?

A. 1684.80

Correct B. 1675.20

C. 1555.20

D. 1636.00

Correct Answer: B

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Question 16 View Details

A retailer purchases 120 identical items for a total of £3,600. He marks each item up by $25\%$ on the cost price to set the initial selling price. He then offers a seasonal discount of $10\%$ on this selling price, followed by an additional promotional discount of $5\%$ on the already discounted price. He sells 90 items at the final discounted price and later sells the remaining 30 items at the original selling price (no discount). What is the overall profit percentage on the whole batch of 120 items? Give your answer to two decimal places.

A. 13.25

B. 15.00

Correct C. 11.41

D. 9.87

Correct Answer: C

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Question 17 View Details

A consumer buys a washing machine for £720 that comes with a 2‑year warranty covering parts only. After 18 months the machine fails because of a faulty motor. Under the warranty the consumer pays a service charge of £45 (parts are free). He could instead claim a replacement under consumer law, which would allow him to obtain a new machine of the same model at 80 % of the original price, provided he returns the faulty machine that has a market resale value of 30 % of the original price. The consumer decides to keep the original machine, pays the £45 service charge, and after another 6 months the machine fails again due to a different fault not covered by the warranty. The repair cost for this second fault is £180. Calculate the total amount the consumer spends on the washing machine (including purchase, service charge and second repair) and compare it with the net cost he would have incurred had he claimed the replacement at the first failure (including purchase of the replacement at the reduced price and resale of the faulty machine). Which option is cheaper and by how much?

A. Replacing is cheaper by £50

Correct B. Keeping the original is cheaper by £135

C. Keeping the original is cheaper by £200

D. Keeping the original is cheaper by £95

Correct Answer: B

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Question 18 View Details

A homeowner contracts a builder to install new kitchen cabinets. The builder quotes £4,200 exclusive of VAT. If the homeowner pays in cash, the builder offers a 5 % discount on the quoted price (excluding VAT). VAT is charged at 15 % on the discounted amount. How much must the homeowner pay in total after the discount and VAT?

A. 4798.5

Correct B. 4588.5

C. 4620.0

D. 4830.0

Correct Answer: B

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Question 19 View Details

A retailer advertises a "Buy One Get One Half Price" (BOGOHP) offer on a product whose listed price is £120. The offer is said to apply to a single purchase per customer. A customer buys two units and pays £180 (full price for the first, half price for the second). The receipt, however, shows a mandatory environmental levy of £15 per unit, which was not mentioned in the advertisement, and a sales tax of 8 % applied to the subtotal after the levy. Determine the effective percentage discount the customer actually received relative to the advertised total price for two units (£240). Also, state whether the retailer's practice could be considered a breach of consumer‑protection regulations concerning misleading price information.

A. Effective discount 7.5%; retailer likely in breach of consumer‑protection regulations

B. Effective discount 5.5%; retailer likely not in breach of consumer‑protection regulations

Correct C. Effective discount 5.5%; retailer likely in breach of consumer‑protection regulations

D. Effective discount 0%; retailer likely in breach of consumer‑protection regulations

Correct Answer: C

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Question 20 View Details

A company launches an online advertising campaign costing £5,000. The campaign generates 12,000 impressions. Of these, 8 % result in clicks. Of the clickers, 25 % fill out a contact form, and 40 % of those contacts convert into sales at an average sale value of £250. The company also incurs a handling cost of £30 for each sale. Calculate: 1. the overall conversion rate from impressions to sales (as a percentage); 2. the total revenue from sales; 3. the total profit (revenue minus advertising and handling costs); 4. the return on investment (ROI) as a percentage based on the advertising spend alone.

A. Conversion rate 0.8%; revenue £23000; profit £15120; ROI 302.4%

B. Conversion rate 0.9%; revenue £24500; profit £16500; ROI 330.0%

Correct C. Conversion rate 0.8%; revenue £24000; profit £16120; ROI 322.4%

D. Conversion rate 0.7%; revenue £21000; profit £13120; ROI 262.4%

Correct Answer: C

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Question 21 View Details

Three partners A, B and C form a partnership. A invests (120{,}000) naira for the whole year. B joins after 4 months and invests (80{,}000) naira for the remaining 8 months. C invests (100{,}000) naira but withdraws after 9 months, so his capital is used for 9 months. At the end of the year the partnership makes a profit of (96{,}000) naira. Assuming profit is shared in proportion to capital multiplied by the time it is invested, what amount of profit does partner B receive? Give your answer in naira to two decimal places.

A. 27936.00

B. 11548.87

Correct C. 20617.45

D. 18731.71

Correct Answer: C

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Question 22 View Details

A shop sells the first 200 units of an item at (150) naira each. The next 300 units are sold at a 10 % discount on the original price. What is the total revenue from selling all 500 units? Give your answer in naira.

A. 75000

B. 67500

C. 72000

Correct D. 70500

Correct Answer: D

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Question 23 View Details

An importer purchases goods costing $\$12{,}000$. The exchange rate is $380$ naira per dollar and the bank charges a commission of 2 % on the dollar amount. What is the total cost in naira, including the commission? Give your answer in naira.

A. 4700000

B. 4896000

C. 4560240

Correct D. 4651200

Correct Answer: D

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Question 24 View Details

A transport company charges a freight rate of $50$ naira per ton‑kilometre. Its fixed cost per trip is $50{,}000$ naira and the variable cost is $30$ naira per ton‑kilometre. The company transports a load of $20$ tons. What is the minimum distance in kilometres the company must travel to achieve a profit of at least $40{,}000$ naira on the trip? Give your answer as the smallest whole number of kilometres.

A. 100

Correct B. 225

C. 93

D. 300

Correct Answer: B

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Question 25 View Details

A marketing campaign uses three media: TV, radio and newspaper. The TV advertisement reaches $120{,}000$ people, radio reaches $80{,}000$ people and newspaper reaches $50{,}000$ people. The overlaps are: TV & radio $30{,}000$ people, TV & newspaper $20{,}000$ people, radio & newspaper $10{,}000$ people, and all three media $5{,}000$ people. Using the principle of inclusion-exclusion, how many distinct individuals are reached by the campaign? Give your answer as a whole number.

A. 185000

Correct B. 195000

C. 190000

D. 200000

Correct Answer: B

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