Gce Model Questions Vol1 2021 Commerce Question 5

Practice essay / theory question 5 from the 2021 Gce Model Questions Vol1 Commerce examination. This question covers Retail Trade, Cost‑Volume‑Profit analysis, Pricing strategy .

Gce Model Questions Vol1 2021 Commerce Essay / Theory
Topics: Retail Trade Cost‑Volume‑Profit analysis Pricing strategy
Question 5 GCE_MODEL_QUESTIONS_VOL1 • 2021 • COMMERCE • essay

A retailer sells a model of mobile phone. The current selling price is ₦20,000 per unit. The variable cost (including purchase price, packaging and sales commission) is ₦12,000 per unit and the monthly fixed overheads (rent, salaries, utilities) amount to ₦240,000. The retailer expects to sell 30 units each month.

Question Parts

( a )
Calculate the break‑even quantity for the retailer under the current price and cost structure.
( b )
The retailer is considering a 10 % increase in the selling price while a new supplier would raise the variable cost by 5 %. Determine the new break‑even quantity.
( c )
Assuming the retailer continues to sell the originally forecast 30 units per month, compare the monthly profit under the original and the new price‑cost structure.
( d )
Based on your calculations, recommend a pricing strategy for the retailer and justify your recommendation.

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About This Question

This is Gce Model Questions Vol1 2021 Commerce Question 5. It is one of the essay questions from the 2021 Gce Model Questions Vol1 Commerce examination.

The question covers Retail Trade, Cost‑Volume‑Profit analysis, Pricing strategy .

View More Gce Model Questions Vol1 2021 Commerce Questions More Gce Model Questions Vol1 Practice Questions Back to Questions

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