Neco 2025 Commerce Question 6

Practice essay / theory question 6 from the 2025 Neco Commerce examination. This question covers Wholesale Trade .

Neco 2025 Commerce Essay / Theory
Topic: Wholesale Trade
Question 6 NECO • 2025 • COMMERCE • essay

A wholesaler, TradeLink, purchases a batch of 500 units of a product from a manufacturer at ₦12,000 per unit. The wholesaler adds a markup of 25 % to determine its standard selling price. It offers its retailers a credit period of 30 days with a 2 % discount for early payment within 10 days. The wholesaler incurs additional monthly expenses of ₦80,000 (rent, salaries) and pays a 5 % sales tax on its revenue.

Question Parts

( a )
Compute the standard selling price per unit before any cash discount.
( b )
Determine the effective selling price per unit if a retailer takes the early payment discount, and calculate the gross profit per unit in both scenarios (standard price and discounted price) before tax.
( c )
Assuming the wholesaler sells all 500 units in a month and 40 % of retailers take the early payment discount, calculate the wholesaler’s net profit for the month after deducting the monthly expenses and sales tax.
( d )
Evaluate the impact of the credit terms on the wholesaler’s cash flow and suggest one alternative credit policy that could improve cash flow without significantly affecting sales.

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About This Question

This is Neco 2025 Commerce Question 6. It is one of the essay questions from the 2025 Neco Commerce examination.

The question covers Wholesale Trade .

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