Neco Model Questions Vol1 2019 Commerce Question 3

Practice essay / theory question 3 from the 2019 Neco Model Questions Vol1 Commerce examination. This question covers Home Trade, Costing, Pricing, Break‑even Analysis .

Neco Model Questions Vol1 2019 Commerce Essay / Theory
Topics: Home Trade Costing Pricing Break‑even Analysis
Question 3 NECO_MODEL_QUESTIONS_VOL1 • 2019 • COMMERCE • essay

A small trader purchases a batch of electronic gadgets at a unit cost of ₦8,000. He intends to earn a profit margin of 25 % on the cost price and to sell the gadgets at a single price per unit. To stimulate sales, he offers a discount of 10 % on the selling price. The trader incurs fixed monthly costs of ₦150,000 (rent, salaries, utilities) and the variable cost per unit remains the purchase cost of ₦8,000.

Question Parts

( a )
Determine the regular selling price per unit that will give the trader a 25 % profit margin on the cost price.
( b )
If a discount of 10 % is granted on the selling price calculated in part (a), compute the new selling price and the resulting profit margin (as a percentage of the discounted price).
( c )
Using the discounted selling price from part (b), determine the number of units the trader must sell each month to cover the fixed costs (i.e., the break‑even quantity).
( d )
Briefly discuss how seasonal fluctuations in demand could affect the break‑even analysis and suggest two practical strategies the trader could adopt to mitigate the associated risks.

Detailed Solution & Marking Scheme

Get the step-by-step solution, key points required by examiners and detailed marking guidance through the Edcrib AI Tutor.

Reveal Answer

About This Question

This is Neco Model Questions Vol1 2019 Commerce Question 3. It is one of the essay questions from the 2019 Neco Model Questions Vol1 Commerce examination.

The question covers Home Trade, Costing, Pricing, Break‑even Analysis .

View More Neco Model Questions Vol1 2019 Commerce Questions More Neco Model Questions Vol1 Practice Questions Back to Questions

Master the Exam!

You've seen a preview, but there are thousands more questions plus AI tutor to break down complex solutions.

Unlock Full Access Available for Android & Windows
Chat with Support