Neco 2020 Commerce Question 3

Practice essay / theory question 3 from the 2020 Neco Commerce examination. This question covers Home Trade .

Neco 2020 Commerce Essay / Theory

Topic: Home Trade

Question 3 NECO • 2020 • COMMERCE • essay

A small retail shop sells a popular brand of mobile phone. The cost price (including freight) of each phone is $\$150$. The shop normally marks up the phones by 40% on the cost price. However, to boost sales during the festive season, the shop offers a discount of 10% on the marked price and must also pay a value‑added tax (VAT) of 5% on the selling price after discount. The shop incurs a fixed monthly overhead of $\$2,500$.

Question Parts

( a )

Calculate the selling price per phone after applying the discount and adding VAT.

( b )

If the shop sells 120 phones in the month, compute the total profit earned (profit = total revenue – total cost – overhead).

( c )

Discuss how a further 5% increase in the discount (making it 15% total) would affect the shop’s profit, assuming the same sales volume of 120 phones. State at least two possible outcomes for the shop’s decision‑making.

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About This Question

This is Neco 2020 Commerce Question 3. It is one of the essay questions from the 2020 Neco Commerce examination.

The question covers Home Trade .

View More Neco 2020 Commerce Questions More Neco Practice Questions Back to Questions

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