Neco 2020 Commerce Question 6

Practice essay / theory question 6 from the 2020 Neco Commerce examination. This question covers Wholesale Trade .

Neco 2020 Commerce Essay / Theory

Topic: Wholesale Trade

Question 6 NECO • 2020 • COMMERCE • essay

A wholesale dealer purchases a batch of 5,000 units of a popular electronic gadget from a manufacturer. The following terms apply:

Question Parts

( a )

If the manufacturer offers a 10% trade discount on the list price of ₦2,500 per unit and a further 2% cash discount for payment within 10 days, calculate the effective cost per unit when the dealer pays within the discount period.

( b )

The dealer incurs fixed monthly overheads of ₦150,000 and wishes to achieve a profit margin of 20% on the effective cost calculated in part (a). Determine the minimum selling price per unit required to meet this target.

( c )

If the dealer decides to extend credit to retailers for 30 days with no additional discount, discuss qualitatively how this decision will affect cash flow and the break‑even point, assuming all other conditions remain unchanged.

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About This Question

This is Neco 2020 Commerce Question 6. It is one of the essay questions from the 2020 Neco Commerce examination.

The question covers Wholesale Trade .

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