Gce Model Questions Vol1 2021 Commerce Question 6

Practice essay / theory question 6 from the 2021 Gce Model Questions Vol1 Commerce examination. This question covers Wholesale Trade, Discount pricing, Markup calculation, Economies of scale .

Gce Model Questions Vol1 2021 Commerce Essay / Theory
Topics: Wholesale Trade Discount pricing Markup calculation Economies of scale
Question 6 GCE_MODEL_QUESTIONS_VOL1 • 2021 • COMMERCE • essay

A wholesaler purchases a generic electronic component from a manufacturer at a base cost of ₦5,000 per unit. The manufacturer offers quantity discounts as follows: 0–99 units – no discount; 100–199 units – 5 % discount; 200 units and above – 10 % discount. The wholesaler incurs a fixed handling cost of ₦30,000 for each order placed. The wholesaler intends to sell the component to retailers with a markup of 30 % on the purchase cost after any discount.

Question Parts

( a )
If the wholesaler orders 150 units for the month, calculate the total cost incurred (including purchase cost after discount and handling cost).
( b )
Determine the selling price per unit that the wholesaler should charge to achieve the 30 % markup on the discounted purchase cost.
( c )
Calculate the wholesaler’s monthly profit when 150 units are sold at the price found in part (b).
( d )
If the wholesaler increases the order size to 250 units to obtain the 10 % discount, assuming the same 30 % markup and that demand can be met, calculate the new monthly profit and comment on the effect of economies of scale.

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About This Question

This is Gce Model Questions Vol1 2021 Commerce Question 6. It is one of the essay questions from the 2021 Gce Model Questions Vol1 Commerce examination.

The question covers Wholesale Trade, Discount pricing, Markup calculation, Economies of scale .

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