Neco Model Questions Vol1 2019 Commerce Question 5

Practice essay / theory question 5 from the 2019 Neco Model Questions Vol1 Commerce examination. This question covers Retail Trade .

Neco Model Questions Vol1 2019 Commerce Essay / Theory

Topic: Retail Trade

Question 5 NECO_MODEL_QUESTIONS_VOL1 • 2019 • COMMERCE • essay

A retailer purchases a line of electronic gadgets from a supplier. The list price of each gadget is ₦10,000. The supplier grants a trade discount of 10% on the list price. If the retailer pays within 30 days, a cash discount of 2% is allowed on the discounted price. The retailer incurs fixed overhead costs of ₦120,000 per month. The retailer wishes to earn a profit of 25 % on the cost of each gadget. Using the above information, answer the following:

Question Parts

( a )

Calculate the net cost of one gadget to the retailer after allowing for the trade discount and the cash discount.

( b )

Determine the selling price per gadget that will give the retailer a 25 % profit on the cost calculated in part (a).

( c )

If the retailer expects to sell the gadgets each month, calculate the break‑even quantity (in units) required to cover the fixed overhead costs.

( d )

Assuming the retailer actually sells 800 gadgets in a month, compute the expected monthly profit.

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About This Question

This is Neco Model Questions Vol1 2019 Commerce Question 5. It is one of the essay questions from the 2019 Neco Model Questions Vol1 Commerce examination.

The question covers Retail Trade .

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