Neco 2018 Commerce Question 3

Practice essay / theory question 3 from the 2018 Neco Commerce examination. This question covers Home Trade .

Neco 2018 Commerce Essay / Theory
Topic: Home Trade
Question 3 NECO • 2018 • COMMERCE • essay

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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About This Question

This is Neco 2018 Commerce Question 3. It is one of the essay questions from the 2018 Neco Commerce examination.

The question covers Home Trade .

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