Neco 2018 Commerce Question 6

Practice essay / theory question 6 from the 2018 Neco Commerce examination. This question covers Wholesale Trade .

Neco 2018 Commerce Essay / Theory

Topic: Wholesale Trade

Question 6 NECO • 2018 • COMMERCE • essay

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:

( 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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This is Neco 2018 Commerce Question 6. It is one of the essay questions from the 2018 Neco Commerce examination.

The question covers Wholesale Trade .

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