Neco Model Questions Vol1 2017 Commerce Question 5

Practice essay / theory question 5 from the 2017 Neco Model Questions Vol1 Commerce examination. This question covers Retail Trade, Revenue and Discount Calculations, Cost of Goods Sold, Profit Determination, Inventory Systems .

Neco Model Questions Vol1 2017 Commerce Essay / Theory
Topics: Retail Trade Revenue and Discount Calculations Cost of Goods Sold Profit Determination Inventory Systems
Question 5 NECO_MODEL_QUESTIONS_VOL1 • 2017 • COMMERCE • essay

GreenMart is a retailer that sells two products: bottled water (Product X) and snack packs (Product Y). The following data relate to the month of March. - Product X: Cost price (CP) = ₦120 per bottle, Selling price (SP) = ₦180 per bottle. - Product Y: CP = ₦200 per pack, SP = ₦300 per pack. - Sales in March: 800 bottles of X and 500 packs of Y. - The retailer offers a 5 % discount on the total bill when the bill exceeds ₦50,000. - Fixed overheads (rent, salaries, utilities) for the month amount to ₦120,000. - Variable expenses are 10 % of the net sales revenue (i.e., after the discount). Answer the following questions:

Question Parts

( a )
Calculate (i) the total sales revenue before any discount, (ii) the amount of discount received, and (iii) the net sales revenue after the discount.
( b )
Determine (i) the cost of goods sold (COGS), (ii) the gross profit, (iii) the variable expenses, and (iv) the net profit after deducting overheads and variable expenses.
( c )
GreenMart is thinking of changing from a periodic inventory system to a perpetual inventory system. (i) State two advantages of a perpetual system for GreenMart. (ii) Explain briefly how the use of a perpetual system could affect the profit figures obtained in part (b).

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About This Question

This is Neco Model Questions Vol1 2017 Commerce Question 5. It is one of the essay questions from the 2017 Neco Model Questions Vol1 Commerce examination.

The question covers Retail Trade, Revenue and Discount Calculations, Cost of Goods Sold, Profit Determination, Inventory Systems .

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