neco 2018 commerce | Essay

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Question 1 View Details
Consider the role of commerce in the Nigerian economy.
Question Parts
(a)
Define commerce and explain its three main functions.
(b)
Distinguish between ‘trade’ and ‘commerce’, giving one example for each.
(c)
Discuss how money facilitates commercial activities in Nigeria.
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Question 2 View Details
A trader imports 200 units of a product at a cost of ₦150 per unit. He adds a markup of 30 % on the cost price to determine his regular selling price. To stimulate sales, he offers a seasonal discount on the regular selling price. In addition to the purchase cost, the trader incurs a transportation expense of ₦2,000 per month and fixed overheads of ₦3,000 per month.
Question Parts
(a)
Calculate the regular selling price per unit.
(b)
If the trader gives a 10 % discount on the regular selling price, what is the discounted selling price per unit?
(c)
Determine the total profit or loss if the trader sells all 200 units at the discounted price.
(d)
If the trader wishes to earn a net profit of ₦2,000 after all costs, what is the greatest discount (in percent, to one decimal place) he can offer on the regular selling price, assuming he sells all units?
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Question 3 View Details
A small retailer purchases a commodity from a wholesaler. The wholesaler lists the price per unit as L naira and offers a 10 % trade discount on this list price. The retailer also incurs a fixed monthly overhead of ₦15,000 and a variable overhead of ₦200 per unit. He intends to sell each unit at a price that gives him a 25 % profit margin on his total cost per unit (including the variable overhead). When the retailer sells 500 units at his intended selling price, his total profit for the month is ₦75,000. Using this information, determine:
Question Parts
(a)
The list price per unit (L) charged by the wholesaler.
(b)
The selling price per unit the retailer intends to charge.
(c)
The break‑even quantity of units the retailer must sell each month (without any discount).
(d)
If the retailer offers a 5 % discount on the selling price to stimulate demand, calculate the new break‑even quantity and discuss whether the discount is advisable.
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Question 4 View Details
A Nigerian cocoa exporter ships 10 tonnes of cocoa to an overseas buyer under CIF terms. The buyer pays a FOB invoice of US$12,000. The exporter bears freight costs of US$800 and insurance costs of US$200. Export duty is charged at 5 % of the CIF value. At the time of shipment the exchange rate is 1 USD = ₦460. After the shipment the naira depreciates to 1 USD = ₦500. Using the above information, determine:
Question Parts
(a)
The total CIF value of the shipment in US dollars.
(b)
The export duty payable in naira (using the original exchange rate).
(c)
The net foreign‑exchange earnings of the exporter in naira after deducting freight, insurance and export duty, using the original exchange rate.
(d)
If the exporter converts the net earnings after the naira has depreciated to ₦500 per US$1, calculate the difference in naira compared with the original conversion and comment on the impact of the exchange‑rate change on the exporter’s earnings.
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Question 5 View Details
A retailer purchases 500 units of a product at a cost of ₦2,400 per unit. His fixed monthly costs amount to ₦150,000. He intends to sell each unit with a markup of 30 % on the cost price. After the first month, because of increased competition, he reduces the selling price by 5 %. Using this information, answer the following:
Question Parts
(a)
Calculate the original selling price per unit before the reduction.
(b)
Determine the number of units the retailer must sell in the first month to break even (before the price reduction).
(c)
After the 5 % reduction, calculate the new selling price, the new break‑even quantity and the percentage increase in units required compared with part (b).
(d)
If the retailer actually sells 600 units at the reduced price, compute his profit or loss for that month.
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Question 6 View Details
A wholesaler purchases a product from a manufacturer whose list price is ₦5,000 per unit. The wholesaler receives a trade discount of 12 % on the list price and, because all his customers pay within the discount period, he also benefits from a cash discount of 3 % on the already discounted price. His monthly operating expenses are ₦80,000. He wishes to set a selling price that will give him a profit margin of 20 % on his net purchase cost. Using this information, answer the following:
Question Parts
(a)
Calculate the net purchase cost per unit for the wholesaler after both discounts.
(b)
Determine the selling price per unit that yields a 20 % profit margin on the net cost found in part (a).
(c)
If the wholesaler sells 1,200 units in a month, calculate his total profit for that month (ignore taxes).
(d)
The wholesaler keeps an average inventory of 3,000 units. Compute the inventory turnover ratio for the month and briefly interpret its significance.
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Question 7 View Details
Answer the following questions on Business Organisations.
Question Parts
(a)
Define a sole proprietorship, a partnership and a private limited company. Contrast their legal personality and the extent of owners’ liability.
(b)
Three entrepreneurs each have ₦5,000,000 personal savings and intend to start a textile business as a partnership. Identify three major disadvantages they are likely to encounter as partners and explain how converting the business into a private limited company could mitigate each disadvantage.
(c)
Outline the statutory steps required to register a private limited company in Nigeria, and mention two key documents that must be filed with the Corporate Affairs Commission (CAC).
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Question 8 View Details
Answer the following questions on Sources of Finance.
Question Parts
(a)
Identify four long‑term sources of finance available to a manufacturing firm in Nigeria. For each source, state one advantage and one limitation.
(b)
The firm plans to raise ₦120,000,000 for a new plant using the following mix: 40% debt at 12% p.a., 35% equity at 15% required return, and 25% retained earnings at 10% cost. Calculate the weighted average cost of capital (WACC). Show all steps.
(c)
Discuss how an increase in the proportion of debt in the capital structure could affect the firm’s risk and profitability. Mention two possible positive effects and two possible negative effects.
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