neco model questions vol1 2022 commerce | Essay

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Question 1 View Details
GreenMart is a small retail shop located in a suburban market in Nigeria. The owner is reviewing the role of commerce in the business and is considering ways to improve commercial performance.
Question Parts
(a)
Define commerce and state its three main functions.
(b)
Explain how each of the three functions you listed contributes to national economic development.
(c)
GreenMart is contemplating the adoption of e‑commerce. Compare the advantages and disadvantages of e‑commerce with those of traditional brick‑and‑mortar trade for GreenMart.
(d)
Suggest three practical measures GreenMart can adopt to enhance its commercial activities and justify each suggestion.
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Question 2 View Details
Nigeria imports wheat and exports cocoa. The following data apply for a particular year: - Wheat import price: $0.50 per kg - Cocoa export price: $2.00 per kg - Wheat imported: 1,200,000 kg - Cocoa exported: 300,000 kg - A 10 % tariff is imposed on wheat imports. - The government gives a 5 % export rebate on cocoa. - Exchange rate: ₦410 per US$1.
Question Parts
(a)
Calculate the total value in Naira of wheat imports before the tariff and after the tariff is applied.
(b)
Calculate the total value in Naira of cocoa exports after the 5 % export rebate is received.
(c)
Determine Nigeria's trade balance (in Naira) for wheat and cocoa combined.
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Question 3 View Details
A small retailer in Lagos deals in electronic accessories. He purchases 500 units of a particular accessory at a unit cost of ₦2,200. He sells the stock in three price tiers as described below:
Question Parts
(a)
Calculate the total cost of the purchase.
(b)
He sells 200 units at ₦3,000 each, 150 units at ₦2,800 each and the remaining units at ₦2,600 each. Compute the total revenue earned from the sale of all 500 units.
(c)
Determine the profit earned from the whole transaction.
(d)
The retailer wishes to achieve a profit margin of 25 % on the total cost. Assuming the first two price tiers remain unchanged, what average selling price must be charged for the remaining 150 units to meet this target?
(e)
During the period the retailer kept an average inventory of 250 units. Calculate the inventory turnover ratio (in terms of units) and comment on what the figure indicates about his stock management.
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Question 4 View Details
A Nigerian exporter ships 10,000 kg of cocoa to a European buyer. The contract price is €2 per kilogram. At the time the contract is signed the exchange rate is ₦560 per €. By the time the cargo arrives the rate has moved to ₦590 per €. An export duty of 5 % of the FOB value and a freight charge of 2 % of the FOB value are applicable.
Question Parts
(a)
Calculate the FOB (Free on Board) value of the shipment in Naira using the contract exchange rate.
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Question 5 View Details
A retail shop sells two types of electronic accessories: headphones and portable chargers. The data for the month are as follows: - Headphones: cost price ₦4,500 per unit, selling price ₦7,200 per unit. - Portable chargers: cost price ₦2,800 per unit, selling price ₦4,500 per unit. - Fixed monthly overhead (rent, salaries, utilities) = ₦150,000. The shop is considering a bundle offer in which each bundle contains one headphone and one portable charger and is sold at the combined selling price of the two items. Answer the following questions.
Question Parts
(a)
Calculate the markup percentage for headphones and for portable chargers.
(b)
If the bundle is sold at the combined selling price of the two items, determine the break‑even number of bundles the shop must sell each month.
(c)
The shop wishes to earn a target profit of ₦120,000 per month from the bundle. How many bundles must be sold to achieve this target?
(d)
Discuss two advantages and two disadvantages of using a bundle pricing strategy for this retailer.
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Question 6 View Details
A wholesaler purchases bulk quantities of a popular brand of bottled juice from the manufacturer and sells to retailers. The details are: - Purchase price per case (12 bottles) = ₦18,000. - The wholesaler offers a 5 % trade discount to retailers who pay within 10 days; otherwise the full price is payable in 30 days. - The wholesaler’s cost of capital is 12 % per annum (simple interest). - Fixed monthly operating expenses = ₦45,000. - Variable cost per case (handling, storage, etc.) = ₦1,200. Assume the wholesaler sells 200 cases each month. Answer the following questions.
Question Parts
(a)
Calculate the cash price per case when the retailer takes the 5 % discount, and determine the effective cost of credit (as an annual percentage) for a retailer who pays after 30 days.
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Question 7 View Details
Obinna is a young entrepreneur in Lagos who plans to expand his small retail business into a chain of stores across the South‑West region. He expects the expansion to require substantial capital, wants limited personal liability, and wishes the business to continue after his possible retirement. He is considering three forms of business organization recognised in Nigeria: sole proprietorship, partnership and private limited company.
Question Parts
(a)
State the three major types of business organization recognised in Nigeria.
(b)
For each of the three types identified in (a), give two advantages and two disadvantages.
(c)
Based on the scenario, recommend the most suitable form of organization for Obinna and justify your choice with reference to liability, capital mobilisation, tax treatment, management control and continuity.
(d)
Explain how the chosen form of organization will affect Obinna’s ability to obtain finance from banks and private investors.
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Question 8 View Details
Alpha Manufacturing Ltd. plans to expand its production capacity and estimates that N200 million is required for new machinery, building extensions and working capital. The firm is evaluating different sources of finance.
Question Parts
(a)
Define internal and external sources of finance and give two examples of each.
(b)
The firm can raise the required N200 million through (i) a 5‑year bank loan at 12% per annum, (ii) issuing 10% preference shares, or (iii) using retained earnings of N30 million and borrowing the balance. Assuming simple interest/straight‑line dividend calculations, compute the total cash outflow for each option over the 5‑year period.
(c)
Given a corporate tax rate of 30%, calculate the after‑tax cost of the bank loan option.
(d)
Considering the calculations above and other qualitative factors (such as control, financial risk and flexibility), recommend the optimal mix of finance for Alpha Manufacturing and justify your recommendation.
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