Neco Model Questions Vol1 2018 Commerce Question 5

Practice essay / theory question 5 from the 2018 Neco Model Questions Vol1 Commerce examination. This question covers Retail Trade, Profit Calculation, Break‑even Analysis .

Neco Model Questions Vol1 2018 Commerce Essay / Theory
Topics: Retail Trade Profit Calculation Break‑even Analysis
Question 5 NECO_MODEL_QUESTIONS_VOL1 • 2018 • COMMERCE • essay

A retailer deals in three product lines – shirts, trousers and shoes. The information for the month of June is shown below. | Product | Selling price per unit (₦) | Cost price per unit (₦) | Units sold | |---------|----------------------------|--------------------------|------------| | Shirts | 5,500 | 4,200 | 200 | | Trousers| 7,800 | 6,300 | 150 | | Shoes | 12,000 | 9,500 | 80 | The retailer incurs fixed overhead costs of ₦150,000 for the month.

Question Parts

( a )
Determine the profit per unit for each product line.
( b )
Calculate the total gross profit earned from each product line and the overall gross profit for the month.
( c )
Using the contribution margin per unit for each product, determine the overall break‑even point in units for the retailer, assuming the sales mix observed in June will continue. Show all steps.
( d )
Identify which product line contributes the greatest amount to covering the fixed costs and suggest one pricing or sales strategy the retailer could adopt to improve overall profitability.

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About This Question

This is Neco Model Questions Vol1 2018 Commerce Question 5. It is one of the essay questions from the 2018 Neco Model Questions Vol1 Commerce examination.

The question covers Retail Trade, Profit Calculation, Break‑even Analysis .

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