Practice neco model questions vol1 commerce 2019 Past Questions

Question 1 View Details

Company X forecasts an annual demand of 12,000 units for a product. The ordering cost is ₦500 per order. The holding cost is 10\% of the unit cost per year. The supplier offers quantity discounts as follows: - 1-199 units: unit cost ₦150 - 200-499 units: 5\% discount on the unit cost - 500-999 units: 10\% discount on the unit cost - 1,000 units or more: 12\% discount on the unit cost Determine the order quantity that minimises the total annual cost (ordering + holding + purchase). State the optimal order quantity.

A. 800

B. 500

Correct C. 1000

D. 1200

Correct Answer: C

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Question 2 View Details

A rectangular warehouse measures 30 m in length and 20 m in width. Standard pallets have a footprint of 1.2 m × 1.0 m (length × width). Pallets are placed with their 1.2 m side parallel to the width of the warehouse. An aisle of 2.5 m must be provided between each row of pallets, but no aisle is required at the outer walls. What is the maximum number of pallets that can be stored in a single layer on the warehouse floor?

Correct A. 180

B. 150

C. 200

D. 160

Correct Answer: A

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Question 3 View Details

A firm needs to transport 200 tons of goods over a distance of $d$ kilometres. It can choose either road transport or rail transport. Road transport: fixed cost per truck = ₦2,000; variable cost = ₦0.20 per kilometre per ton; each truck carries 10 tons. Rail transport: fixed cost per train = ₦5,000; variable cost = ₦0.30 per kilometre per ton; each train carries 40 tons. Assuming the firm uses the minimum whole number of trucks or trains required to move the 200 tons, find the distance $d$ at which the total cost of road transport equals the total cost of rail transport.

A. 900

B. 1200

Correct C. 750

D. 600

Correct Answer: C

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Question 4 View Details

A company requires ₦10,000,000 for a project. It can obtain the funds by either: 1. A bank loan of ₦10,000,000 at 12\% simple interest per annum, payable at the end of the year. 2. Issuing 10‑year debentures with a face value of ₦1,000 each (total face value ₦10,000,000). The debentures are issued at 96\% of face value and incur flotation costs equal to 2\% of the issue price. The coupon rate is 10\% per annum, payable annually. Calculate the effective annual cost (as a percentage of net proceeds) for each option and state which source of finance is cheaper.

Correct A. Debentures (effective cost ≈ 11.3 %)

B. Debentures (effective cost ≈ 10.5 %)

C. Bank loan (effective cost ≈ 11.8 %)

D. Bank loan (effective cost ≈ 12.0 %)

Correct Answer: A

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Question 5 View Details

In 2022, Nigeria imported 1,200,000 tonnes of cocoa beans at an average price of ₦1,500 per tonne. In 2023, imports fell to 950,000 tonnes and the average price rose to ₦1,620 per tonne. a) Compute the total value of cocoa bean imports for each year. b) Determine the percentage change in the total import value from 2022 to 2023 (indicate increase or decrease).

A. 2022: ₦1.944 billion; 2023: ₦1.539 billion; decrease of 20.8 %

B. 2022: ₦1.8 billion; 2023: ₦1.425 billion; decrease of 20.8 %

Correct C. 2022: ₦1.8 billion; 2023: ₦1.539 billion; decrease of 14.5 %

D. 2022: ₦1.8 billion; 2023: ₦1.539 billion; decrease of 12.5 %

Correct Answer: C

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Question 6 View Details

An exporter receives a payment of $50,000 for a shipment. The bank deducts a commission of $2\%$ on the dollar amount and then applies a foreign‑exchange surcharge of $1.5\%$ on the Naira amount after conversion. The prevailing market exchange rate is ₦410 per $. The exporter's cost of the goods is ₦15,000,000 and he wants a net profit of ₦5,000,000 after all deductions. What is the minimum exchange rate (in Naira per dollar) that must be negotiated to achieve the target profit?

A. 420

B. 410

Correct C. 415

D. 400

Correct Answer: C

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Question 7 View Details

A trader buys 200 units of an item at ₦1,200 each. He adds a markup of $25\%$ to set the selling price. A customer purchases 50 units and receives a cash discount of $10\%$ on the total invoice. How much does the customer pay?

A. 68750

B. 63000

Correct C. 67500

D. 72000

Correct Answer: C

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Question 8 View Details

A retail shop sells a product with a regular selling price of ₦8,000 per unit and a cost price of ₦5,500 per unit. Fixed monthly overheads are ₦120,000. For the first 30 days of a 90‑day month the shop offers a seasonal discount of $12\%$ on the selling price; during this period it sells 150 units. In the remaining 60 days it sells 90 units at the regular price. Determine the net profit for the month.

A. 216000

Correct B. 336000

C. 33600

D. 456000

Correct Answer: B

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Question 9 View Details

A home baker produces 80 loaves of bread each week. The cost of ingredients per loaf is ₦250 and each loaf is sold for ₦400. She also pays a weekly market fee of ₦5,000. What is her weekly profit?

A. 2000

B. 5000

C. 12000

Correct D. 7000

Correct Answer: D

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Question 10 View Details

A wholesaler must transport 12,000 kg of goods from Lagos to Kano, a distance of 950 km. Two transport companies quote the following rates:\n\n- Company A: a fixed hire charge of ₦150,000 plus ₦12 per kilometre for the whole load. If the distance exceeds 800 km, Company A gives a $5\%$ discount on the variable kilometre charge.\n- Company B: no fixed charge, but a rate of ₦0.20 per kilogram per kilometre.\n\nWhich company offers the lower total cost for this shipment?

A. Company B

B. Company C

Correct C. Company A

D. Both companies cost the same

Correct Answer: C

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Question 11 View Details

An exporter in Nigeria purchases goods costing US$12,000. Freight charges are US$800. The prevailing exchange rate is ₦410 per US$. Export duty of $5\%$ is levied on the CIF (cost, insurance and freight) value in Naira. The bank charges a commission of $2\%$ on the amount converted. The exporter wishes to earn a profit of $15\%$ on the total cost (including duty and commission). What selling price in Naira must be quoted to achieve this profit?

A. 6155904

B. 6035200

Correct C. 6457664

D. 6336960

Correct Answer: C

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Question 12 View Details

An insurance company sets a base premium of ₦2,500 per policy. A risk loading of $12\%$ is added, then an early‑payment discount of $5\%$ is applied, and finally a value‑added tax of $7.5\%$ is charged on the discounted premium. (i) Determine the final premium per policy. (ii) If the company has fixed administrative expenses of ₦50,000 and aims for a profit of ₦180,000, what is the minimum number of policies that must be sold?

A. Final premium = ₦3,010; minimum policies = 77

B. Final premium = ₦2,553.13; minimum policies = 91

Correct C. Final premium = ₦2,859.5; minimum policies = 81

D. Final premium = ₦2,660; minimum policies = 87

Correct Answer: C

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Question 13 View Details

An electronic gadget was originally priced at ₦5,000. Over two years the seller applied the following successive adjustments: Year 1 - a price increase of $12\%$; Year 1 - a discount of $5\%$; Year 2 - a surcharge of $8\%$; Year 2 - a promotional discount of $10\%$. (i) Compute the final selling price (to the nearest kobo). (ii) The Consumer Protection Act limits the net increase in price of a product to $20\%$ per year. Does the final price comply with this limit? State the final price and answer "compliant" or "non‑compliant".

A. ₦5,171.04, non‑compliant

B. ₦4,950.00, compliant

C. ₦5,200.00, compliant

Correct D. ₦5,171.04, compliant

Correct Answer: D

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Question 14 View Details

An advertising firm plans a media mix using TV and radio. Each TV spot reaches 120,000 viewers and costs ₦150,000. Each radio spot reaches 45,000 listeners and costs ₦45,000. The audiences overlap by $30\%$ of the smaller total audience. The firm needs to reach at least 500,000 unique individuals and cannot exceed a total budget of ₦1,200,000. Determine the numbers of TV spots and radio spots (both integers) that achieve the required reach with the smallest total number of spots. State the TV spots and radio spots.

Correct A. TV spots = 1, Radio spots = 9

B. TV spots = 2, Radio spots = 8

C. TV spots = 3, Radio spots = 7

D. TV spots = 0, Radio spots = 10

Correct Answer: A

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Question 15 View Details

A company can advertise through three media: - Newspaper: cost ₦200,000, reach 250,000 readers. - Magazine: cost ₦150,000, reach 180,000 readers. - Online banner: cost ₦80,000, reach 120,000 viewers. (i) Which medium offers the lowest cost per thousand (CPM)? (ii) To reach at least 1,000,000 people, what combination of ads (any number of each type) gives the minimum total cost? State the chosen medium(s) and the number of ads of each, together with the total cost.

A. Online medium has the lowest CPM (₦666.67 per 1,000). Minimum‑cost plan: 8 online ads, total cost ₦640,000

B. Magazine medium has the lowest CPM (₦833.33 per 1,000). Minimum‑cost plan: 6 magazine ads, total cost ₦900,000

C. Newspaper medium has the lowest CPM (₦800.00 per 1,000). Minimum‑cost plan: 5 newspaper ads, total cost ₦1,000,000

Correct D. Online medium has the lowest CPM (₦666.67 per 1,000). Minimum‑cost plan: 9 online ads, total cost ₦720,000

Correct Answer: D

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Question 16 View Details

A partnership of three persons A, B and C contributes capital for different periods as follows: A contributes $\text{₦}120,000$ for 6 months, B contributes $\text{₦}80,000$ for 9 months, and C contributes $\text{₦}100,000$ for 12 months. At the end of one year the partnership earns a total profit of $\text{₦}96,000$. Assuming profit is shared in proportion to the product of capital and time contributed, what amount of profit does B receive? Give your answer to the nearest naira.

Correct A. ₦26,182

B. ₦27,648

C. ₦25,600

D. ₦32,000

Correct Answer: A

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Question 17 View Details

A trader purchases 500 units of a product at a unit cost of $\text{₦}2,400$. He receives a trade discount of 5 % on the total invoice, then adds a markup of 20 % on the discounted cost to set his selling price per unit. He also pays a sales commission equal to 3 % of the total sales revenue. What is his net profit from the transaction? Give your answer to the nearest naira.

A. ₦196,800

B. ₦193,800

Correct C. ₦186,960

D. ₦228,000

Correct Answer: C

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Question 18 View Details

An advertising campaign aims to achieve a total of 200 GRPs. The target audience consists of 250,000 people. The media plan uses two media: TV and radio. Each TV spot costs $\text{₦}20,000$ and delivers 20 GRPs; each radio spot costs $\text{₦}4,000$ and delivers 5 GRPs. The advertiser wants to allocate at least twice as many GRPs to TV as to radio, must purchase at least one radio spot, and the total cost must not exceed $\text{₦}200,000$. Determine the number of TV spots and radio spots that meet the GRP target and cost constraint while maximising the number of TV spots.

Correct A. 9 TV spots and 4 radio spots

B. 10 TV spots and 3 radio spots

C. 8 TV spots and 5 radio spots

D. 7 TV spots and 6 radio spots

Correct Answer: A

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Question 19 View Details

A company issues a 3‑year loan note with a face value of $\text{₦}1,200,000$. The note carries an annual coupon rate of 6 % payable at the end of each year, and the market effective interest rate at issuance is 8 %. The loan is therefore issued at a discount. Using the effective‑interest method, calculate (i) the interest expense recognised in the second year, and (ii) the carrying amount of the loan at the end of the second year. Round your answers to the nearest naira.

A. Interest expense: ₦88,450; Carrying amount: ₦1,185,600

Correct B. Interest expense: ₦92,557; Carrying amount: ₦1,177,524

C. Interest expense: ₦95,200; Carrying amount: ₦1,172,300

D. Interest expense: ₦90,000; Carrying amount: ₦1,180,000

Correct Answer: B

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Question 20 View Details

A student deposits $\text{₦}50,000$ in a bank account that pays simple interest at a rate of 5 % per annum. How much interest will the student earn after 3 years? Give your answer in naira.

A. ₦5,000

B. ₦10,000

C. ₦7,875

Correct D. ₦7,500

Correct Answer: D

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Question 21 View Details

A wholesaler purchases 500 units of a product at ₦2,000 per unit. He intends to sell each unit to retailers at a marked price $M$ per unit. He offers a trade discount of 12% on $M$. The manufacturer pays the wholesaler a commission of 5% of the retailer's purchase price (after discount) for each unit sold. The wholesaler wants a net profit of 15% on his total cost after accounting for the commission received. What should be the marked price $M$ per unit (in naira, to two decimal places)?

Correct A. 2489.10

B. 2473.12

C. 2381.16

D. 2613.64

Correct Answer: A

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Question 22 View Details

A trader imports 200 kg of cocoa beans at a purchase price of ₦1,500 per kilogram. Freight charges are 8% of the total landed cost, and insurance is 2% of the total landed cost. What is the total landed cost per kilogram (in naira, rounded to the nearest naira)?

A. 1650

B. 1660

C. 1663

Correct D. 1667

Correct Answer: D

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Question 23 View Details

An entrepreneur supplies goods worth ₦850,000 to a client on credit. Payment is due 30 days after the invoice date. For each month the payment is delayed beyond the due date, interest of 2% per month is charged on the original amount, and a fixed penalty of ₦5,000 is added for each month delayed. The client pays ₦1,020,000 on the 75th day after the invoice. Determine (a) the number of whole months of delay, (b) the total interest charged, (c) the total penalty charged, and (d) the amount of the original invoice that remains unpaid (if any).

Correct A. 1 month; ₦17,000; ₦5,000; ₦0

B. 2 months; ₦34,000; ₦10,000; ₦0

C. 1 month; ₦17,000; ₦0; ₦0

D. 0 months; ₦0; ₦0; ₦162,000

Correct Answer: A

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Question 24 View Details

An insurance company offers fire insurance for a warehouse valued at ₦12,000,000. The expected loss is estimated at 45% of the insured value. The insurer adds a loading of 20% on the sum of the expected loss and a policy tax of 5% on the expected loss. After loading, a profit margin of 12% is added on the amount after loading. What is the final premium the insurer should charge the client (in naira, to the nearest naira)?

A. 7700000

B. 7512000

C. 7625000

Correct D. 7620480

Correct Answer: D

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Question 25 View Details

A business obtains a loan of ₦5,000,000 from a bank. The nominal annual interest rate is 12% compounded monthly. The bank also charges a processing fee of 1.5% of the loan amount, payable upfront, and a monthly service charge of ₦10,000. The loan is to be repaid in equal monthly installments over 3 years. Determine (a) the total monthly installment amount (including the service charge), (b) the total amount repaid over the loan term, and (c) the effective annual interest rate (EAR) that reflects the impact of the processing fee and service charges, expressed as a percentage to two decimal places.

Correct A. ₦175,938; ₦6,333,768; 18.52%

B. ₦180,250; ₦6,489,000; 19.10%

C. ₦176,800; ₦6,364,800; 18.20%

D. ₦170,500; ₦6,138,000; 17.85%

Correct Answer: A

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