Practice gce model questions vol1 commerce 2025 Past Questions

Question 1 View Details

A washing machine is advertised with a marked price of \(P\) naira. The seller offers a cash discount of 10 % on the marked price. In addition, the seller adds a compulsory environmental levy equal to 4 % of the marked price, but this levy is not disclosed to the consumer before purchase. The consumer pays a total of ₦112,800. (a) Determine the marked price \(P\). (b) Calculate the cash discount amount and the levy amount. (c) Under the Consumer Protection Act, a seller who fails to disclose any additional charge must pay a penalty equal to 20 % of the undisclosed charge. Compute the penalty payable by the seller. (d) State whether the seller complied with the disclosure requirement.

A. Marked price = 115000; Discount = 11500; Levy = 4600; Penalty = 920; Seller did not comply

B. Marked price = 120000; Discount = 12000; Levy = 4000; Penalty = 800; Seller did not comply

C. Marked price = 120000; Discount = 11000; Levy = 5000; Penalty = 800; Seller complied

Correct D. Marked price = 120000; Discount = 12000; Levy = 4800; Penalty = 960; Seller did not comply

Correct Answer: D

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Question 2 View Details

A retailer in Nigeria wants to import 500 units of a gadget. Supplier A quotes an FOB price of \(\text{₦}2{,}400\) per unit. Freight from the port to the warehouse costs \(\text{₦}150\) per unit. Insurance is charged at 0.5 % of the CIF value (i.e., of the sum of FOB price and freight) per unit. Import duty is 12 % of the CIF value. Supplier B offers a CIF price of \(\text{₦}2{,}850\) per unit (including freight and insurance). No additional freight or insurance is required for Supplier B, and the import duty remains 12 % of the CIF value. (a) Calculate the landed cost per unit for each supplier. (b) Determine which supplier offers the lower landed cost. (c) If the retailer requires a profit margin of 18 % on the landed cost, compute the selling price per unit for the chosen supplier.

A. Supplier A landed cost = 2870.28; Supplier B landed cost = 3100; Chosen supplier = B; Selling price = 3658

B. Supplier A landed cost = 2900; Supplier B landed cost = 3192; Chosen supplier = A; Selling price = 3400

Correct C. Supplier A landed cost = 2870.28; Supplier B landed cost = 3192; Chosen supplier = A; Selling price = 3386.93

D. Supplier A landed cost = 2850; Supplier B landed cost = 3192; Chosen supplier = A; Selling price = 3350

Correct Answer: C

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Question 3 View Details

A business needs equipment costing \(\text{₦}500{,}000\) and is considering two financing options. Option 1: A bank loan at 5 % per annum simple interest, repayable in equal annual installments over 4 years. Option 2: A hire‑purchase arrangement with 5 equal annual payments. Each payment consists of a principal component equal to 20 % of the cash price and interest charged at 6 % per annum on the outstanding balance (reducing‑balance method). (a) Calculate the total amount paid under each option. (b) Which option results in the lower total payment?

A. Option 1 total = 580000; Option 2 total = 590000; Cheaper option = Option 1

B. Option 1 total = 600000; Option 2 total = 610000; Cheaper option = Option 1

C. Option 1 total = 620000; Option 2 total = 590000; Cheaper option = Option 2

Correct D. Option 1 total = 600000; Option 2 total = 590000; Cheaper option = Option 2

Correct Answer: D

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Question 4 View Details

A company plans to import goods worth €200,000 in three months. The current spot exchange rate is \(\text{₦}550\) per € and the three‑month forward rate is quoted at \(\text{₦}560\) per €. The company can either wait and purchase the euros at the spot rate prevailing in three months (the expected spot rate is \(\text{₦}570\) per €) or lock in the forward contract. (a) Calculate the expected cost in naira if the company waits for the spot rate. (b) Calculate the cost in naira if the company locks in the forward contract. (c) Which alternative is financially preferable based on the expected spot rate? (d) If the actual spot rate in three months turns out to be \(\text{₦}570\) per €, determine the gain or loss on the forward contract.

Correct A. Wait cost = 114000000; Forward cost = 112000000; Prefer forward; Forward gain = 2000000

B. Wait cost = 115000000; Forward cost = 112000000; Prefer forward; Forward gain = 3000000

C. Wait cost = 114000000; Forward cost = 112000000; Prefer wait; Forward gain = -2000000

D. Wait cost = 114000000; Forward cost = 113000000; Prefer forward; Forward gain = 1000000

Correct Answer: A

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Question 5 View Details

A business takes a loan of \(\text{₦}1{,}000{,}000\) with a nominal annual interest rate of 12 % compounded monthly, to be repaid in equal monthly installments over 2 years. (a) Calculate the monthly installment amount. (b) Determine the effective annual rate (EAR) for this loan. (c) A credit‑card offers an APR of 13 % compounded daily (assume 365 days). Compute the EAR for the credit‑card. (d) Based on the EARs, which financing option has the lower effective cost?

A. Monthly installment ≈ 47075; Loan EAR ≈ 12.68%; Credit‑card EAR ≈ 13.89%; Lower cost = credit‑card

B. Monthly installment ≈ 48500; Loan EAR ≈ 13.10%; Credit‑card EAR ≈ 14.20%; Lower cost = credit‑card

Correct C. Monthly installment ≈ 47075; Loan EAR ≈ 12.68%; Credit‑card EAR ≈ 13.89%; Lower cost = loan

D. Monthly installment ≈ 45200; Loan EAR ≈ 12.30%; Credit‑card EAR ≈ 13.45%; Lower cost = loan

Correct Answer: C

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Question 6 View Details

A retailer buys 200 identical items for a total cost of ₦80,000. He plans to set a uniform markup of \(x\%\) on the cost price per item to obtain the list price. After setting the list price, he offers a seasonal discount of 15\% on the list price, followed by an additional promotional discount of 5\% on the price after the first discount. All items are sold at the final discounted price. The retailer also incurs fixed overhead costs of ₦12,000 for the period. What is the smallest whole‑number markup percentage \(x\) that will allow the retailer to achieve a net profit of at least ₦20,000?

A. 70

B. 78

C. 82

Correct D. 74

Correct Answer: D

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Question 7 View Details

A shopkeeper purchases a product for ₦500 and sells it for ₦650. What is the profit percentage earned on this transaction?

A. 35

B. 40

C. 25

Correct D. 30

Correct Answer: D

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Question 8 View Details

A small business needs ₦500,000 of capital. It can either (i) obtain a bank loan for the full amount at a simple interest rate of 12\% per annum, or (ii) issue new shares priced at ₦80 each, promising an annual dividend equal to 8\% of the share price. The business expects a profit before any financing costs of ₦120,000 per year. Which source of finance will give the higher net profit after financing costs, and what will that net profit be?

A. Bank loan; net profit = ₦60,000

B. Bank loan; net profit = ₦80,000

C. Issuing shares; net profit = ₦70,000

Correct D. Issuing shares; net profit = ₦80,000

Correct Answer: D

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Question 9 View Details

A shop sells 150 identical items at a price of ₦200 each. What is the total sales revenue generated from these sales?

Correct A. 30000

B. 25000

C. 20000

D. 35000

Correct Answer: A

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Question 10 View Details

A company plans an advertising campaign using two media: TV and radio. Each TV spot costs ₦150,000 and reaches 1.2 million viewers; each radio ad costs ₦30,000 and reaches 300,000 listeners. The target audience size is 2 million people. The company wants a total Gross Rating Points (GRP) of 240, where one GRP equals 1\% of the target audience reached once. It decides that the frequency (average number of times each member of the target audience sees/hears the ad) must be the same for both media. Determine the number of TV spots and radio ads required and the total cost of the campaign.

Correct A. 2 TV spots and 8 radio ads; total cost = ₦540,000

B. 3 TV spots and 6 radio ads; total cost = ₦630,000

C. 2 TV spots and 7 radio ads; total cost = ₦510,000

D. 1 TV spot and 10 radio ads; total cost = ₦450,000

Correct Answer: A

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Question 11 View Details

Company X has \(2,000,000\) shares trading at \(£12\) each. It announces a \(1\text{-for-}4\) rights issue at a subscription price of \(£8\) per new share. Rights are quoted at \(£2.5\). Determine the theoretical ex‑rights price per share and the total amount of new capital that will be raised.

A. £12.00 per share; £5,000,000

B. £9.60 per share; £2,400,000

C. £10.80 per share; £3,200,000

Correct D. £11.20 per share; £4,000,000

Correct Answer: D

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Question 12 View Details

Partners A, B and C invest \(£30,000\), \(£20,000\) and \(£10,000\) respectively for a period of 3 years. They agree that profit will be shared in proportion to the capital contributed, plus a 5 % per‑annum interest on each partner's capital, and that A receives a fixed salary of \(£2,000\) per year. If the total profit after 3 years is \(£45,000\), how much does each partner receive?

A. A: £23,500; B: £13,500; C: £8,000

B. A: £26,500; B: £12,000; C: £6,500

Correct C. A: £25,500; B: £13,000; C: £6,500

D. A: £24,000; B: £14,000; C: £7,000

Correct Answer: C

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Question 13 View Details

A retailer purchases stock costing \(£18,000\). He applies a 30 % markup on cost to set the initial selling price, then offers a seasonal discount of 12 % on that price, and finally adds VAT at 15 % to the discounted price. What is the final price paid by the consumer and what is the overall profit margin (as a percentage of the original cost)?

Correct A. Final price £23,680.80; profit margin 31.6 %

B. Final price £20,592.00; profit margin 14.4 %

C. Final price £22,500.00; profit margin 25.0 %

D. Final price £24,426.00; profit margin 35.7 %

Correct Answer: A

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Question 14 View Details

A telecom provider charges a fixed connection fee of \(£0.50\) per call, \(£0.08\) per minute for the first 10 minutes of a call and \(£0.05\) per minute thereafter. A business plan gives a 20 % discount on total call charges (excluding connection fees) if the total call minutes in a month exceed 200 minutes. In a month the business makes 45 calls: 30 calls last 5 minutes each and 15 calls last 10 minutes each. Calculate the total telephone bill for the month.

A. £46.50

Correct B. £41.70

C. £37.20

D. £38.10

Correct Answer: B

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Question 15 View Details

A wholesaler sells a product at \(£25\) per unit. Variable cost per unit is \(£15\) and fixed costs are \(£12,000\) per month. He is considering reducing the selling price to \(£22\) per unit; market research predicts that for each \(£1\) reduction in price, sales volume will increase by 200 units per month. Determine (a) the current break‑even volume, (b) the new break‑even volume after the price reduction, and (c) the percentage change in break‑even volume.

Correct A. Current break‑even: 1,200 units; New break‑even: ≈1,714 units; Increase: ≈42.9 %

B. Current break‑even: 1,100 units; New break‑even: ≈1,600 units; Increase: ≈45.5 %

C. Current break‑even: 1,250 units; New break‑even: ≈1,800 units; Increase: ≈44.0 %

D. Current break‑even: 1,300 units; New break‑even: ≈2,000 units; Increase: ≈53.8 %

Correct Answer: A

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Question 16 View Details

A wholesaler receives an order for 500 units of product X. The supplier's quoted price is \(\text{₦}12{,}000\) per unit. The wholesaler negotiates a first discount of 8% on the quoted price, then a further discount of 5% on the reduced price. After discounts, the wholesaler adds a sales tax of 7.5% (VAT) to the purchase cost. The wholesaler also pays a commission of 2% of the final selling price to the sales agent. The wholesaler wants to set a selling price per unit that yields a net profit margin of 12% on the total transaction (after tax and commission). What should be the selling price per unit (rounded to the nearest naira)?

A. 14000

B. 12800

Correct C. 13113

D. 13500

Correct Answer: C

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Question 17 View Details

A retailer's average daily demand for product Y is 120 units with a standard deviation of 30 units. Lead time can be 5 days, but the retailer may reduce it to 3 days by paying an extra \(\text{₦}2{,}000\) for each day saved per order. Holding cost is 15% of the unit cost per year; the unit cost is \(\text{₦}500\). The retailer targets a 95% service level (z = 1.645) and incurs a stock‑out penalty of \(\text{₦}1{,}500\) for each stock‑out event. The retailer operates 250 working days per year. Should the retailer reduce the lead time, i.e., is the total annual cost (holding + stock‑out + lead‑time reduction) lower with a 3‑day lead time than with a 5‑day lead time?

Correct A. No, keep the 5‑day lead time

B. No, reduce the 3‑day lead time

C. Yes, keep the 5‑day lead time

D. Yes, reduce the lead time to 3‑day

Correct Answer: A

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Question 18 View Details

A home‑based baker has fixed monthly costs of \(\text{₦}150{,}000\) and a variable cost of \(\text{₦}2{,}500\) per cake. The regular selling price per cake is \(\text{₦}5{,}000\). For orders of ten or more cakes the baker gives a 12% discount on the selling price per cake. The baker wishes to earn a profit of at least \(\text{₦}200{,}000\) in a month. What is the minimum total number of cakes that must be sold (including any discounted sales) to achieve this profit target?

A. 150

Correct B. 140

C. 160

D. 130

Correct Answer: B

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Question 19 View Details

An advertising agency plans a TV campaign for a market of 2 million viewers. Two channels are available: Channel A costs \(\text{₦}150\) per GRP and reaches 60% of the target market per GRP; Channel B costs \(\text{₦}120\) per GRP and reaches 45% of the target market per GRP. Thirty percent of the audience reached by Channel A is also reached by Channel B per GRP. The agency must achieve a total of 300 GRPs, with at least 40% of the total GRPs coming from Channel A. Assuming fractional GRPs can be purchased, what is the minimum total cost of the campaign?

A. 45000

B. 42000

C. 38000

Correct D. 39600

Correct Answer: D

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Question 20 View Details

A retail store recorded a cost of goods sold (COGS) of \(\text{₦}4{,}800{,}000\) and an average inventory value of \(\text{₦}600{,}000\) in 2025, giving an inventory turnover ratio of 8 times per year. The store is considering a new policy that will reduce the average inventory by 15% while COGS is expected to rise by 5% due to higher sales volume. Calculate the new inventory turnover ratio, the new days sales of inventory (DSI), and state whether the policy improves inventory efficiency.

A. Turnover ≈9.0 times per year; DSI ≈40 days; efficiency improves

Correct B. Turnover ≈9.9 times per year; DSI ≈37 days; efficiency improves

C. Turnover ≈8.5 times per year; DSI ≈43 days; efficiency improves

D. Turnover ≈10.5 times per year; DSI ≈34 days; efficiency declines

Correct Answer: B

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Question 21 View Details

A company launches an advertising campaign using three media: TV, radio and the internet. The TV advertisement reaches \(120{,}000\) people, the radio advertisement reaches \(80{,}000\) people and the internet advertisement reaches \(150{,}000\) people. Market research shows that \(30{,}000\) people see both TV and radio, \(40{,}000\) see both TV and internet, \(20{,}000\) see both radio and internet, and \(10{,}000\) see all three media. The cost per person reached is £\(0.05\) for TV, £\(0.03\) for radio and £\(0.02\) for internet. The company has a budget of £\(12{,}000\). Determine (a) the total number of unique individuals reached, (b) the total cost of the campaign, (c) the effective cost per unique individual (rounded to three decimal places), and (d) whether the campaign stays within the budget.

A. Unique reach = 270,000; total cost = £12,500; effective cost ≈ £0.046 per person; the campaign exceeds the £12,000 budget.

Correct B. Unique reach = 270,000; total cost = £11,400; effective cost ≈ £0.042 per person; the campaign is within the £12,000 budget.

C. Unique reach = 260,000; total cost = £11,400; effective cost ≈ £0.044 per person; the campaign is within the £12,000 budget.

D. Unique reach = 270,000; total cost = £11,400; effective cost ≈ £0.050 per person; the campaign is within the £12,000 budget.

Correct Answer: B

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Question 22 View Details

A consumer buys a washing machine with a list price of £\(480\). A promotional discount of 10% is applied before tax, and sales tax of 5% is then added. The consumer's credit card gives a cash‑back of 1.5% on the amount actually paid after the discount and tax. The seller's 2‑year warranty covers parts only, so the repair of a failed part after 18 months costs the consumer nothing. However, the repair took 45 days, exceeding the 30‑day limit, entitling the consumer to a statutory price reduction of 20% of the original purchase price. Calculate the final amount the consumer has effectively paid for the washing machine.

A. £352.24

B. £360.40

Correct C. £350.80

D. £357.60

Correct Answer: C

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Question 23 View Details

A warehouse stores two products, A and B, on standard pallets. Each pallet can hold at most 1.5 tonnes (1500 kg) and 3 m³ of volume. Product A weighs 25 kg per unit and occupies 0.04 m³; at most 60 units of A may be placed on a pallet. Product B weighs 40 kg per unit and occupies 0.06 m³; at most 40 units of B may be placed on a pallet. An order requires 2 400 units of A and 1 800 units of B. Pallets may contain a mix of A and B provided the weight, volume and per‑product unit limits are respected. What is the minimum number of pallets needed to store the entire order?

A. 90

Correct B. 89

C. 92

D. 88

Correct Answer: B

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Question 24 View Details

A home‑based baker purchases ingredients at a cost of £\(2\) per cake and sells each cake for £\(5\). In a month she sells 120 cakes and pays a market‑stall rent of £\(150\). What is her profit for the month?

Correct A. £210

B. £240

C. £180

D. £200

Correct Answer: A

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Question 25 View Details

A student takes a loan of £\(5{,}000\) at a nominal annual interest rate of 8% compounded monthly, to be repaid over 3 years with equal monthly instalments. After 12 months she makes an extra lump‑sum payment of £\(1{,}000\) toward the principal. What is the new monthly instalment amount for the remaining 24 months? (Round to two decimal places.)

A. £112.45

B. £108.90

C. £115.00

Correct D. £111.30

Correct Answer: D

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