Neco Model Questions Vol1 2017 Commerce Question 1

Practice essay / theory question 1 from the 2017 Neco Model Questions Vol1 Commerce examination. This question covers Introduction to Commerce .

Neco Model Questions Vol1 2017 Commerce Essay / Theory

Topic: Introduction to Commerce

Question 1 NECO_MODEL_QUESTIONS_VOL1 • 2017 • COMMERCE • essay

Obinna runs a small retail shop that sells school stationery. He purchases notebooks at ₦120 each and pens at ₦45 each. In a month he sells 150 notebooks and 200 pens. Fixed costs (rent, electricity, etc.) amount to ₦30,000 per month. He wishes to earn a total profit of at least ₦20,000 for the month and decides to apply the same percentage profit margin to the cost price of each item.

Question Parts

( a )

Determine the profit margin (as a percentage over cost) that must be applied to both notebooks and pens so that the required profit of ₦20,000 is achieved.

( b )

Using the margin found in part (a), calculate the selling price per notebook and per pen (round to the nearest kobo).

( c )

Discuss two advantages and two disadvantages of using a uniform profit margin for different products in a retail business.

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About This Question

This is Neco Model Questions Vol1 2017 Commerce Question 1. It is one of the essay questions from the 2017 Neco Model Questions Vol1 Commerce examination.

The question covers Introduction to Commerce .

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