Neco 2022 Commerce Question 3

Practice essay / theory question 3 from the 2022 Neco Commerce examination. This question covers Home Trade, Cost‑volume‑profit analysis, Pricing decisions .

Neco 2022 Commerce Essay / Theory

Topics: Home Trade Cost‑volume‑profit analysis Pricing decisions

Question 3 NECO • 2022 • COMMERCE • essay

A young entrepreneur runs a home‑based trading business dealing in electronic accessories. The business incurs fixed costs of \u20a9120,000 per month. The variable cost per unit is \u20a92,500 and the normal selling price per unit is \u20a94,000.

Question Parts

( a )

Determine the break‑even quantity of units per month.

( b )

The trader decides to offer a 10 % discount on the selling price. As a result, the expected sales volume increases by 20 % over the break‑even quantity calculated in part (a). Calculate the new monthly profit (or loss).

( c )

Based on your calculation in part (b), advise whether the 10 % discount policy is financially advisable. Support your recommendation with brief calculations.

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About This Question

This is Neco 2022 Commerce Question 3. It is one of the essay questions from the 2022 Neco Commerce examination.

The question covers Home Trade, Cost‑volume‑profit analysis, Pricing decisions .

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