Neco Model Questions Vol1 2020 Commerce Question 2

Practice objective / multiple choice question 2 from the 2020 Neco Model Questions Vol1 Commerce examination.

Neco Model Questions Vol1 2020 Commerce Objective / Multiple Choice Hard Difficulty
Question 2 NECO_MODEL_QUESTIONS_VOL1 • 2020 • COMMERCE • objective

A company is choosing between two advertising campaigns for a new product that sells for \(\text{₦}5,000\) per unit. Campaign A charges a fixed fee of \(\text{₦}150,000\) plus a variable cost equal to \(5\%\) of sales revenue. Campaign B has no fixed fee but a variable cost equal to \(8\%\) of sales revenue. Expected sales volume is between 30 and 80 units. Determine the sales volume at which the total advertising cost of the two campaigns is equal, and indicate which campaign is cheaper for the realistic sales range.

Answer Options

Correct Answer A. Campaign B is cheaper for any realistic sales volume (30-80 units); break‑even at 1,000 units
B. Campaign B is cheaper for any realistic sales volume (30-80 units); break‑even at 500 units
C. Campaign A is cheaper for any realistic sales volume (30-80 units); break‑even at 500 units
D. Campaign A is cheaper for any realistic sales volume (30-80 units); break‑even at 1,000 units
Correct Answer
A
Correct Option:
Campaign B is cheaper for any realistic sales volume (30-80 units); break‑even at 1,000 units

About This Question

This is Neco Model Questions Vol1 2020 Commerce Question 2. It is one of the objective questions from the 2020 Neco Model Questions Vol1 Commerce examination.

Difficulty level: Hard .

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