Practice neco commerce 2020 Past Questions | Edcrib

Question 1 View Details

A merchant purchases $150$ units of a product at ₦2,400 each. He wants to earn a profit of $25\%$ on his total cost. He will set a marked price per unit, then give a first discount of $10\%$ on the marked price, a second discount of $5\%$ on the reduced price, and finally a cash discount of $2\%$ if the buyer pays within 10 days. What should be the marked price per unit (in naira, rounded to the nearest naira) so that after all discounts the merchant still achieves his desired profit?

A. ₦3,400

B. ₦3,620

Correct C. ₦3,580

D. ₦3,500

Correct Answer: C

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Question 2 View Details

A home‑based trader makes handmade candles. His monthly fixed costs are ₦45,000 and the variable cost per candle is ₦250. He currently sells each candle for ₦500. He decides to raise the selling price by 20\% and, because of a new raw material, the variable cost per candle also rises by 10\%. What is the new break‑even quantity (rounded up to the nearest whole candle)?

Correct A. 139

B. 138

C. 140

D. 150

Correct Answer: A

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Question 3 View Details

A shop sells 120 items each at a price of ₦2,350. What is the total revenue generated from these sales (in naira)?

A. ₦240,000

Correct B. ₦282,000

C. ₦300,000

D. ₦28,200

Correct Answer: B

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Question 4 View Details

An email to a supplier reads:\n\"Dear Sir,\nWe have received the latest shipment but noticed that 15\% of the items are damaged. Please advise on the next steps.\nRegards,\nAisha\"\nWrite an appropriate subject line for this email that clearly reflects its purpose.

A. Report of Delayed Items in Recent Shipment - Request for Action

Correct B. Report of Damaged Items in Recent Shipment - Request for Action

C. Notification of Damaged Items in Recent Shipment - Request for Replacement

D. Report of Damaged Items in Recent Shipment - Confirmation of Receipt

Correct Answer: B

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Question 5 View Details

In a telephone conversation, a customer says: \"I would like to place an order for 200 units of product X, and I need the delivery by the 15th of next month. Could you confirm the total cost and the payment terms?\" The sales representative replies: \"Certainly, I will email you the quotation shortly and our standard payment terms are 30\% advance and the balance on delivery.\"\nWhat is the most appropriate closing phrase the sales representative should use to end the call professionally?

A. We appreciate your business. Your order will be confirmed soon. Have a wonderful day.

B. Thank you for your interest. We will process your order shortly. Have a great day.

C. Thank you for contacting us. We will send the quotation today. Have a nice day.

Correct D. Thank you for choosing us. We look forward to serving you. Have a pleasant day.

Correct Answer: D

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Question 6 View Details

An item has an average daily demand of $120$ units with a standard deviation of $30$ units. Lead time is either $5$ days (probability 0.8) or $7$ days (probability 0.2). The company wants a 95\% service level (z = 1.645). The unit cost is $\text{₦}500$, the ordering cost is $\text{₦}15\,000$ and the holding cost is 25\% of the unit cost per year. Determine (i) the Economic Order Quantity (EOQ) and (ii) the reorder point (including safety stock).

Correct A. EOQ $\approx 3,243$ units; Reorder point $\approx 843$ units

B. EOQ \$\\approx 3,100\$ units; Reorder point \$\\approx 800\$ units

C. EOQ \$\\approx 3,500\$ units; Reorder point \$\\approx 900\$ units

D. EOQ \$\\approx 2,800\$ units; Reorder point \$\\approx 720\$ units

Correct Answer: A

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Question 7 View Details

A trader purchases $50$ units of a product at $\text{₦}2,200$ each. He wishes to earn a profit of 25\% on his total cost and then add a value‑added tax of 7.5\% on the selling price before tax. What should be the unit selling price inclusive of VAT?

A. ₦3,154.33 per unit

Correct B. ₦2,956.25 per unit

C. ₦2,915.00 per unit

D. ₦2,750.00 per unit

Correct Answer: B

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Question 8 View Details

A small business uses two telephone services.\n\n- Mobile plan: monthly subscription $\text{₦}5,000$ includes $200$ minutes; each additional minute costs $\text{₦}30$.\n- VOIP plan: monthly subscription $\text{₦}2,500$ includes $500$ minutes; each additional minute costs $\text{₦}10$.\n\nEach month the business makes $800$ minutes of calls, of which $30\%$ are international and are charged at double the per‑minute rate of the plan on which they are billed. Minutes can be allocated between the two plans in any proportion.\n\nFind the allocation of minutes to the mobile and VOIP plans that minimises the total monthly cost and state that minimum cost.

A. Allocate 600 minutes to VOIP (180 international, 420 local) and 200 minutes to mobile; minimum cost = ₦8,700 per month

B. Allocate 500 minutes to VOIP (150 international, 350 local) and 300 minutes to mobile; minimum cost = ₦9,200 per month

C. Allocate 700 minutes to VOIP (210 international, 490 local) and 100 minutes to mobile; minimum cost = ₦8,900 per month

Correct D. Allocate 600 minutes to VOIP (240 international, 360 local) and 200 minutes to mobile; minimum cost = ₦8,500 per month

Correct Answer: D

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Question 9 View Details

A bank offers two savings products.\n\nProduct A: nominal annual rate 8\% compounded quarterly, with a monthly maintenance fee of $\text{₦}500$.\nProduct B: nominal annual rate 7.5\% compounded monthly, no fees, but interest is paid at 5\% nominal compounded monthly if the balance falls below $\text{₦}50,000$.\n\nA customer intends to deposit $\text{₦}100,000$ for 2 years and keep the balance above the minimum throughout. Calculate the final amount for each product and indicate which product yields the higher amount.

A. Product A: approx ₦104,800; Product B: approx ₦117,300; Product B is better

B. Product A: approx ₦106,200; Product B: approx ₦115,500; Product A is better

C. Product A: approx ₦103,500; Product B: approx ₦112,000; Product A is better

Correct D. Product A: approx ₦105,166; Product B: approx ₦116,090; Product B is better

Correct Answer: D

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Question 10 View Details

A business needs $\text{₦}2,000,000$. It can obtain financing by:\n\n1. A bank loan at 12\% per annum payable monthly over 5 years (interest on a reducing balance).\n2. Hire‑purchase: 20\% down‑payment, the balance financed at 15\% simple interest per annum for 5 years, with equal annual instalments.\n3. Issuing 10\% preference shares, dividend payable annually, no redemption.\n\nAssuming the project requires the full $\text{₦}2,000,000$ at the start, compute the total cost over the 5‑year period for each option (interest or dividend paid) and state which option is cheapest.

A. Bank loan total interest ≈ ₦650,000; Hire‑purchase total interest = ₦1,300,000; Preference shares total dividend = ₦950,000; Cheapest option: preference shares

B. Bank loan total interest ≈ ₦600,000; Hire‑purchase total interest = ₦1,250,000; Preference shares total dividend = ₦1,100,000; Cheapest option: bank loan

Correct C. Bank loan total interest ≈ ₦670,000; Hire‑purchase total interest = ₦1,200,000; Preference shares total dividend = ₦1,000,000; Cheapest option: bank loan

D. Bank loan total interest ≈ ₦720,000; Hire‑purchase total interest = ₦1,150,000; Preference shares total dividend = ₦1,050,000; Cheapest option: hire‑purchase

Correct Answer: C

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Question 11 View Details

An entrepreneur marks a product at ₦150,000. He offers a trade discount of $12\%$ on the marked price and, if the buyer pays within 10 days, an additional cash discount of $5\%$ on the balance. After receiving the cash‑discounted amount he must add VAT of $7.5\%$ before presenting the invoice to the buyer. He later states that his net profit after all discounts and VAT is exactly $20\%$ of his original cost price. What was the original cost price of the product (in naira)?

Correct A. ₦104,500

B. ₦102,300

C. ₦99,900

D. ₦108,750

Correct Answer: A

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Question 12 View Details

An enterprise must move $1,200$ kg of goods from Lagos to Kano. It can use road transport, which charges ₦0.80 per kilogram for the first 500 kg, ₦0.10 per kilogram for any additional kilograms, plus a fixed loading charge of ₦2,000. Alternatively, rail transport charges a flat rate of ₦0.55 per kilogram together with a handling charge of ₦3,500. Because of vehicle limits, at most 800 kg can be sent by road. Determine how many kilograms should be sent by road and by rail so that the total transportation cost is minimum, and state that minimum cost (in naira).

A. Road: 700 kg, Rail: 500 kg; Minimum cost = ₦6,195

B. Road: 600 kg, Rail: 600 kg; Minimum cost = ₦6,240

C. Road: 800 kg, Rail: 400 kg; Minimum cost = ₦6,200

Correct D. Road: 800 kg, Rail: 400 kg; Minimum cost = ₦6,150

Correct Answer: D

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Question 13 View Details

A consumer buys a washing machine for ₦120,000. The sales contract contains a clause that, if the consumer returns the machine within 30 days for any reason, a restocking fee of $25\%$ of the purchase price plus a handling charge of ₦5,000 must be paid. The consumer returns the machine after 20 days because it is defective. Under the Consumer Protection Act, any restocking fee may not exceed $10\%$ of the purchase price and handling charges may not exceed ₦2,000. Is the clause unfair, and if so, how much money is the consumer entitled to recover from the seller (in naira)?

A. The clause is unfair; the consumer can recover ₦15,000.

B. The clause is fair; the consumer owes ₦5,000.

C. The clause is unfair; the consumer can recover ₦25,000.

Correct D. The clause is unfair; the consumer can recover ₦21,000.

Correct Answer: D

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Question 14 View Details

A bank offers a loan of ₦500,000 with a nominal annual interest rate of $12\%$ compounded quarterly. Another bank offers a discount loan where a discount of $10\%$ is deducted from the face value up‑front and the borrower repays the full face value after one year. Calculate the effective annual rate for each loan and state which loan is cheaper for the borrower.

A. Loan A: 13.00 %; Loan B: 10.00 %; Discount loan is cheaper.

B. Loan A: 12.55 %; Loan B: 11.11 %; Discount loan is more expensive.

C. Loan A: 11.80 %; Loan B: 12.20 %; Discount loan is cheaper.

Correct D. Loan A: 12.55 %; Loan B: 11.11 %; Discount loan is cheaper.

Correct Answer: D

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Question 15 View Details

A savings account pays $5\%$ annual interest compounded monthly with no monthly fee. A second account charges a fixed monthly maintenance fee of ₦500 and pays $6\%$ annual interest compounded monthly. Assuming a customer deposits a lump sum and makes no withdrawals, what is the smallest deposit amount (in naira) for which the second account yields a higher balance after one year than the first account?

A. ₦610,000

B. ₦560,000

C. ₦630,000

Correct D. ₦586,801

Correct Answer: D

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Question 16 View Details

A wholesaler purchases a product at a cost price of ₦500 per unit. He wants to earn a profit of $20\\%$ on the cost after paying a sales commission of $5\\%$ on the selling price and giving a trade discount of $10\\%$ on his listed price. What should be the listed price (in naira) he sets, rounded to the nearest naira?

A. 710

B. 700

C. 695

Correct D. 702

Correct Answer: D

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Question 17 View Details

Three partners A, B and C invest capital in a business for different periods. A invests $120,000$ naira for 6 months, B invests $80,000$ naira for 9 months, and C invests $100,000$ naira for 12 months. At the end of one year the business makes a profit of $96,000$ naira. How much profit does partner B receive?

A. 28800

B. 30000

Correct C. 26182

D. 24000

Correct Answer: C

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Question 18 View Details

A 5‑year government bond with a face value of $10,000$ naira pays an annual coupon of $8\\%$ of the face value, payable once each year. The bond is currently selling for $9,200$ naira. An investor is also considering a stock that pays a dividend of $800$ naira per year and is currently priced at $10,000$ naira. The investor requires a minimum yield of $10\\%$ per annum. (a) Calculate the bond's yield to maturity (to two decimal places). (b) Determine which investment meets the required yield and state the excess yield (in percentage points) of that investment over the required rate.

A. Bond, excess yield 0.10%

Correct B. Bond, excess yield 0.12%

C. Bond, excess yield -0.12%

D. Stock, excess yield 0.12%

Correct Answer: B

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Question 19 View Details

A firm's capital structure consists of the following sources: equity 35\% costing $12\\%$, preference shares 10\% costing $8\\%$, bank loan 30\% at an interest rate of $9\\%$ (tax‑deductible at a corporate tax rate of $30\\%$), and retained earnings 25\% costing $10\\%$. Compute the firm's weighted average cost of capital (WACC) expressed as a percentage to two decimal places.

A. 9.12%

B. 10.15%

C. 9.85%

Correct D. 9.39%

Correct Answer: D

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Question 20 View Details

An importer buys goods costing $150,000$ naira. Freight charges are $5\\%$ of the cost, and insurance is $2\\%$ of the sum of the cost and freight. What is the total landed cost of the goods (in naira)?

A. 168150

Correct B. 160650

C. 157650

D. 160500

Correct Answer: B

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Question 21 View Details

A retailer orders a product with an annual demand of $12{,}000$ units. The ordering cost is $\mathrm{₦}500$ per order. Holding cost consists of $20\%$ of the unit cost per year plus a fixed warehousing charge of $\mathrm{₦}2{,}000$ per year. The total annual cost (excluding purchase cost) is minimized when the order quantity is $600$ units. Determine the unit cost of the product (in ₦, rounded to two decimal places).

A. 150.00

Correct B. 166.67

C. 33.33

D. 180.00

Correct Answer: B

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Question 22 View Details

An insurance company offers a 3‑year motor policy. The base annual premium is 5\% of the insured value, which is $\mathrm{₦}2{,}400{,}000$. A loading of 12\% is added for administrative expenses and a tax of 5\% is applied on the loaded premium. If the client pays the whole 3‑year premium upfront, the company gives an 8\% discount on the total amount after loading and tax. Calculate the amount the client must pay (in ₦, to two decimal places).

A. 389491.00

B. 625968.00

Correct C. 389491.20

D. 423360.00

Correct Answer: C

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Question 23 View Details

Three partners A, B and C invest capital of $\mathrm{₦}120{,}000$, $\mathrm{₦}80{,}000$ and $\mathrm{₦}100{,}000$ respectively. Profit is shared in proportion to each partner's capital plus a 10\% interest on that capital, and also in proportion to the number of hours each works per week: A works 30 hrs, B works 20 hrs and C works 25 hrs. If the total profit for the year is $\mathrm{₦}96{,}000$, how much profit does partner B receive?

A. 19940

B. 23270

Correct C. 25600

D. 28160

Correct Answer: C

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Question 24 View Details

An importer buys 5{,}000 kg of cocoa beans at $US$2.40$ per kg. The exchange rate is $\mathrm{₦}410$ per US$. The shipment is subject to a 15\% ad valorem tariff on the customs value (in Naira) and a 2\% surcharge on the tariff amount. After calculating the duty, the importer receives a 5\% discount on the total duty (tariff plus surcharge). What is the total amount in Naira the importer must pay, including the purchase cost and the discounted duty?

A. 5672760

Correct B. 5635122

C. 5635860

D. 5497680

Correct Answer: B

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Question 25 View Details

A consumer purchases a washing machine for $\mathrm{₦}150{,}000$. The manufacturer provides a 2‑year warranty covering any mechanical failure. The machine depreciates linearly to zero over 10 years. After 18 months the machine fails due to a defect covered by the warranty. The warranty states that the refund shall be the lesser of (i) the purchase price and (ii) the depreciated value at the time of failure plus a 10\% compensation for inconvenience. How much refund does the consumer receive?

A. 115500

Correct B. 140250

C. 150000

D. 142500

Correct Answer: B

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