Neco 2019 Commerce Question 5

Practice essay / theory question 5 from the 2019 Neco Commerce examination. This question covers Retail Trade, Cost and Revenue Analysis, Break-even Analysis, Discount Impact .

Neco 2019 Commerce Essay / Theory
Topics: Retail Trade Cost and Revenue Analysis Break-even Analysis Discount Impact
Question 5 NECO • 2019 • COMMERCE • essay

A retailer sells two types of electronic accessories: headphones and power banks. The retailer purchases headphones at a cost price of \(\₦2,500\) each and power banks at \(\₦3,200\) each. The selling price per unit is \(\₦3,800\) for headphones and \(\₦4,500\) for power banks. Fixed monthly overheads (rent, salaries, utilities) amount to \(\₦420,000\). In order to boost sales, the retailer offers a 10% discount on the selling price of headphones for customers who buy at least 5 headphones in a single transaction. The retailer expects to sell 200 headphones and 150 power banks each month without the discount.\n\nAnswer the following:

Question Parts

( a )
Calculate the monthly contribution margin per unit for headphones and power banks.
( b )
Determine the break‑even quantity of headphones (without discount) and power banks for the month.
( c )
If the retailer implements the 10% discount on headphones for bulk purchases of at least 5 units, evaluate the effect on: i) the contribution margin per discounted headphone, ii) the new break‑even quantity for headphones, assuming the same fixed costs. State whether the discount policy is advisable based on the break‑even analysis.

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About This Question

This is Neco 2019 Commerce Question 5. It is one of the essay questions from the 2019 Neco Commerce examination.

The question covers Retail Trade, Cost and Revenue Analysis, Break-even Analysis, Discount Impact .

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