Practice gce model questions vol1 commerce 2022 Past Questions

Question 1 View Details

A stationery shop sells pens at $\text{₦}150$ each, notebooks at $\text{₦}350$ each and erasers at $\text{₦}50$ each. If a customer buys 4 pens, 3 notebooks and 5 erasers, what is the total amount payable?

A. 1850

B. 1750

Correct C. 1900

D. 2000

Correct Answer: C

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Question 2 View Details

A home‑based trader purchases goods for a total cost of $\text{₦}80,000$. He adds a markup of 25\% to set the selling price and then offers a discount of 10\% on this marked price. What is the final selling price after the discount?

Correct A. 90000

B. 85000

C. 95000

D. 100000

Correct Answer: A

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Question 3 View Details

An insurance company calculates the annual premium as 5\% of the sum insured plus a fixed administration fee of $\text{₦}2,000$. If the sum insured exceeds $\text{₦}200,000$, the percentage part receives a 10\% discount. The client wants the premium not to exceed $\text{₦}20,000$. What is the maximum sum insured the client can obtain?

Correct A. 400000

B. 350000

C. 420000

D. 380000

Correct Answer: A

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Question 4 View Details

A mobile telephone plan charges a fixed monthly fee of $\text{₦}500$, which includes the first 100 minutes free. The next 200 minutes (i.e., minutes 101 to 300) are charged at $\text{₦}2$ per minute, and any usage beyond 300 minutes is charged at $\text{₦}1.5$ per minute. What is the total monthly bill for a usage of 450 minutes?

A. 1150

Correct B. 1125

C. 1075

D. 1250

Correct Answer: B

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Question 5 View Details

An investor buys 200 shares of a company at $\text{₦}1,250$ per share. The broker charges a commission of 0.5\% of the transaction value on both the purchase and the sale. The investor wishes to make an overall profit of 8\% on the total amount invested (including the purchase commission). At what price per share must the investor sell the shares to achieve this target?

A. 1380.25

B. 1325.5

C. 1350

Correct D. 1363.57

Correct Answer: D

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Question 6 View Details

An insurance company offers a motor insurance policy. The base premium is $5\%$ of the sum insured. A loading of $20\%$ is added for high‑risk drivers. A discount of $10\%$ is then applied on the loaded premium for customers with a two‑year no‑claims bonus. Finally, a tax of $5\%$ is added after the discount. If the final premium paid by a customer is ₦45,000, what is the sum insured (in naira)?

A. 833333

B. 714286

C. 190476

Correct D. 793650

Correct Answer: D

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Question 7 View Details

An advertising campaign uses two media: TV spots costing ₦150,000 each and delivering 250,000 impressions per spot, and online banner ads charged at a CPM (cost per thousand impressions) of ₦25. The target audience is 5,000,000 people, and the advertiser wants a total of 120 Gross Rating Points (GRPs), where one GRP equals $1\%$ of the target audience. At least $40\%$ of the total impressions must come from TV. Determine the number of TV spots to run and the amount spent on online ads (in naira) that achieve exactly 120 GRPs while minimising total cost. State the minimum total cost.

A. 150000

Correct B. 1587500

C. 1875000

D. 1731250

Correct Answer: B

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Question 8 View Details

A warehouse stocks a single product. Annual demand is 12,000 units. The ordering cost is ₦8,000 per order and the unit cost is ₦200. Holding cost equals $25\%$ of the unit cost per year. Lead‑time demand is normally distributed with mean 200 units and standard deviation 50 units. To achieve a $95\%$ service level, determine (a) the Economic Order Quantity (EOQ) and (b) the reorder point (ROP). Give the EOQ (rounded to the nearest unit) and the ROP (rounded to the nearest unit).

A. EOQ ≈ 1,960 units; ROP = 260 units

B. EOQ ≈ 2,100 units; ROP = 250 units

C. EOQ ≈ 1,800 units; ROP = 300 units

Correct D. EOQ ≈ 1,960 units; ROP = 282 units

Correct Answer: D

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Question 9 View Details

Three partners A, B and C start a partnership with capital contributions of ₦120,000, ₦80,000 and ₦100,000 respectively. The partnership agreement states that each partner receives $5\%$ interest on his/her capital for the year, and the remaining profit of ₦84,000 is then shared in proportion to the capital contributions. How much profit does each partner receive after the interest has been paid?

A. A: 34000; B: 21000; C: 28000

B. A: 33600; B: 22400; C: 26000

Correct C. A: 33600; B: 22400; C: 28000

D. A: 33000; B: 23000; C: 28000

Correct Answer: C

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Question 10 View Details

A warehouse can either store goods for an average of 15 days, incurring a holding cost of ₦0.12 per unit per day, or use a cross‑docking system that eliminates storage but incurs a handling cost of ₦0.30 per unit. The product's annual demand is 200,000 units. (a) Calculate the annual cost difference between the two options and state which option is cheaper. (b) Determine the break‑even average holding period (in days) at which the holding‑cost option and the cross‑docking option would cost the same.

Correct A. Cross‑docking cheaper by ₦300,000; break‑even holding period = 2.5 days

B. Cross‑docking cheaper by ₦300,000; break‑even holding period = 5 days

C. Cross‑docking cheaper by ₦150,000; break‑even holding period = 4 days

D. Cross‑docking cheaper by ₦350,000; break‑even holding period = 2 days

Correct Answer: A

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Question 11 View Details

A logistics company charges a base freight rate of $0.50$ £ per kilometre plus $2$ £ per tonne of cargo. A fuel surcharge of $5\%$ is added to the total freight charge (base plus per‑tonne). Each trip also incurs a fixed operating cost of $150$ £. A customer wishes to ship $20$ tonnes and wants the total cost not to exceed $800$ £. What is the greatest whole number of kilometres the cargo can be transported?

A. 1165

Correct B. 1158

C. 1157

D. 1200

Correct Answer: B

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Question 12 View Details

A consumer purchases a television for $120{,}000$ ₦ with a 2‑year warranty covering defects. After $18$ months the TV fails. The retailer offers two options:\n\n1. Repair the TV at a cost of $15{,}000$ ₦ to the consumer, plus a restocking fee equal to $10\%$ of the original purchase price.\n\n2. Return the TV for a cash refund. The refund amount is the original price minus straight‑line depreciation for the $18$ months and minus a restocking fee of $5\%$ of the depreciated value.\n\nWhich option gives the consumer the larger net cash amount (i.e., the higher amount received or the lower amount paid)? State the option and the net cash amount.

A. Option A (repair) - net cash paid ₦27,000

B. Option B (refund) - net cash received ₦30,000

C. Option A (repair) - net cash paid ₦28,500

Correct D. Option B (refund) - net cash received ₦28,500

Correct Answer: D

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Question 13 View Details

Two partners, A and B, form a partnership. Partner A contributes $50{,}000$ ₦ for the first 6 months of the year and then adds an additional $30{,}000$ ₦, so that for the remaining 6 months A's capital is $80{,}000$ ₦. Partner B contributes $40{,}000$ ₦ for the entire 12 months. At year‑end the partnership makes a profit of $84{,}000$ ₦, which is to be shared in proportion to each partner's capital‑months (capital amount multiplied by the number of months it was invested). How much profit does each partner receive?

A. A receives ₦48,000; B receives ₦36,000

Correct B. A receives ₦52,000; B receives ₦32,000

C. A receives ₦60,000; B receives ₦24,000

D. A receives ₦56,000; B receives ₦28,000

Correct Answer: B

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Question 14 View Details

A small business uses a telephone service that charges a base rate of $0.25$ ₦ per minute for the first 200 minutes each month and $0.15$ ₦ per minute for any additional minutes. A value‑added tax (VAT) of $12\%$ is applied to the total call charge. In addition, the business pays a fixed monthly subscription fee of $20$ ₦ that is exempt from VAT. In a particular month the business makes $350$ minutes of calls. What is the total amount payable for that month, including VAT and the subscription fee? Give your answer in naira to two decimal places.

A. 94.90

B. 103.60

Correct C. 101.20

D. 92.50

Correct Answer: C

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Question 15 View Details

A borrower needs a loan of $500{,}000$ ₦ for 3 years and can choose between two offers:\n\n* Offer X: simple interest at $8\%$ per annum.\n* Offer Y: a nominal rate of $7.5\%$ per annum, compounded quarterly.\n\nWhich offer results in the lower total amount to be repaid at the end of the term? State the offer and the total repayment amount (rounded to the nearest naira).

A. Offer X - total repayment ₦625,000

B. Offer Y - total repayment ₦624,800

C. Offer Y - total repayment ₦620,000

Correct D. Offer X - total repayment ₦620,000

Correct Answer: D

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Question 16 View Details

A home‑based baker buys flour at $\text{₦}500$ per kilogram. Each loaf requires $0.25$ kg of flour. She also incurs a packaging cost of $\text{₦}30$ per loaf and a fixed overhead of $\text{₦}2\,000$ for each batch she bakes. She bakes batches of $40$ loaves. The marked price of a loaf is $\text{₦}350$. She offers a $10\%$ cash discount on the total order if the customer buys $50$ loaves or more; otherwise no discount is given. She wants to earn a profit of at least $\text{₦}5\,000$ in a month. Assuming all loaves produced are sold, what is the minimum number of batches she must bake and sell to meet her profit target?

A. 3

Correct B. 1

C. 4

D. 2

Correct Answer: B

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Question 17 View Details

A wholesaler purchases a product from a manufacturer. The manufacturer's list price per unit is unknown. The wholesaler receives a trade discount of $12\%$ on the list price and then adds a markup of $25\%$ on his cost price to set the wholesale price. He pays a sales commission equal to $5\%$ of the wholesale price and offers a cash discount of $3\%$ on the wholesale price to customers who pay within 10 days. The wholesaler's monthly fixed overhead is $\text{₦}50\,000$ and he purchases $1\,000$ units each month. He wishes to achieve a net profit of at least $\text{₦}120\,000$ after all discounts, commissions and overheads. What is the minimum list price per unit (in naira) that will allow him to meet this profit target? Round up to the nearest naira.

A. 1245

B. 1300

C. 1350

Correct D. 1288

Correct Answer: D

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Question 18 View Details

A warehouse stores a single product. Annual demand is $12\,000$ units. The ordering cost per order is $\text{₦}800$. The holding cost is $20\%$ of the unit cost per year. The unit cost (in naira) is unknown. The warehouse charges a storage fee of $\text{₦}2$ per unit per month for any inventory held above $500$ units at any time. The manager wants to choose an order quantity $Q$ that minimises the total annual cost (ordering + holding + storage fee) while ensuring that the average inventory never exceeds $800$ units. If the total annual cost at the optimum is exactly $\text{₦}48\,000$, determine the optimal order quantity $Q$ and the corresponding unit cost.

A. Order quantity 500 units; unit cost ₦550

B. Order quantity 450 units; unit cost ₦580

C. Order quantity 350 units; unit cost ₦620

Correct D. Order quantity 400 units; unit cost ₦600

Correct Answer: D

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Question 19 View Details

An importer buys $5\,000$ kg of cocoa beans from Ghana. The invoice price is US$\$2.20$ per kilogram. The exchange rate is $\text{₦}460$ per US$\$$. Freight charges are $\text{₦}150$ per kilogram. Insurance is charged at $0.8\%$ of the CIF value (cost + insurance + freight) in naira. An import duty of $5\%$ is levied on the CIF value. The bank charges a foreign‑exchange commission of $1.5\%$ on the amount converted. Calculate the total landed cost per kilogram (in naira) incurred by the importer.

A. 1120.20

B. 1195.50

Correct C. 1245.04

D. 1300.75

Correct Answer: C

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Question 20 View Details

A company listed on the Nigerian Stock Exchange has a current share price of $\text{₦}250$. It pays an annual dividend of $\text{₦}15$ per share, expected to grow at $6\%$ per year indefinitely. The market required rate of return for similar risk is $12\%$. The company announces a 1‑for‑4 rights issue at a subscription price that is $20\%$ lower than the current market price. Existing shareholders may subscribe to the rights issue. Determine the theoretical ex‑rights price per share after the rights issue, and state whether the rights issue is attractive to shareholders based on the dividend discount model.

Correct A. Ex‑rights price ₦240 - attractive

B. Ex‑rights price ₦250 - attractive

C. Ex‑rights price ₦245 - attractive

D. Ex‑rights price ₦230 - unattractive

Correct Answer: A

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Question 21 View Details

A wholesaler purchases a batch of 500 units of a product for a total cost of ₦120,000. He intends to sell the units to retailers. He sets a marked price of $M$ naira per unit. Retailers receive a trade discount of $12\%$ on the marked price, and if they pay within 10 days they obtain an additional cash discount of $3\%$ on the discounted price. The wholesaler's fixed monthly overhead is ₦15,000. To achieve a monthly profit of ₦30,000, what is the minimum marked price per unit ($M$) he should set? Give your answer to two decimal places.

Correct A. 386.68

B. 382.50

C. 400.12

D. 390.00

Correct Answer: A

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Question 22 View Details

A consumer bought a television for ₦150,000 that came with a 2‑year warranty. After 9 months the TV developed a fault. Under the Consumer Protection Act the consumer may elect a price‑reduction remedy. The reduction must be proportional to the period the product was defective during the warranty. In addition, the Act entitles the consumer to a statutory compensation equal to 10\% of the purchase price, and simple interest at 8\% per annum on the total compensation from the date of purchase to the settlement date, which is 14 months after purchase. Calculate the total amount the seller must pay the consumer.

A. 75000

Correct B. 77999

C. 77000

D. 80000

Correct Answer: B

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Question 23 View Details

A retailer purchases a product at a wholesale cost of ₦2,400 per unit. He applies a markup of 30\% on cost to determine the selling price, and then offers a seasonal discount of 5\% on that selling price to customers. The retailer incurs fixed monthly rent of ₦45,000 and a variable overhead of ₦150 for each unit sold. How many units must be sold in a month for the retailer to achieve a profit of ₦20,000? Give the smallest whole number of units.

A. 162

B. 150

Correct C. 158

D. 170

Correct Answer: C

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Question 24 View Details

A wholesaler deals in two products, A and B. The cost per unit is ₦80 for A and ₦120 for B. The marked selling prices (before any discount) are ₦100 for A and ₦150 for B. The wholesaler offers a quantity‑discount scheme: if more than 200 units of A are purchased, a 10\% discount on A's marked price is applied to all units of A; if more than 150 units of B are purchased, a 12\% discount on B's marked price is applied to all units of B. In a particular month the wholesaler sold 250 units of A and 180 units of B. Fixed monthly overhead is ₦20,000. Determine the wholesaler's total profit (or loss) for that month.

A. -16340

B. -15240

C. -14340

Correct D. -15340

Correct Answer: D

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Question 25 View Details

A small business finances its operations through three sources: 40\% equity at a cost of 12\% per annum, 35\% bank loan at an interest rate of 9\% per annum (interest is tax‑deductible, corporate tax rate 30\%), and 25\% overdraft facility at an interest rate of 15\% per annum (interest is not tax‑deductible). Calculate the weighted average cost of capital (WACC) for the business, expressed as a percentage to two decimal places.

A. 12.40

Correct B. 10.76

C. 11.23

D. 9.84

Correct Answer: B

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