Neco Model Questions Vol1 2023 Commerce Question 6

Practice essay / theory question 6 from the 2023 Neco Model Questions Vol1 Commerce examination. This question covers Wholesale Trade .

Neco Model Questions Vol1 2023 Commerce Essay / Theory
Topic: Wholesale Trade
Question 6 NECO_MODEL_QUESTIONS_VOL1 • 2023 • COMMERCE • essay

A wholesaler purchases a commodity from a manufacturer at ₦5,000 per unit. In addition, the wholesaler incurs a handling cost of ₦200 per unit. Fixed overheads amount to ₦800,000 per quarter. The wholesaler intends to earn a 20 % profit margin on the total cost per unit and offers a trade discount of 15 % on the listed price to retailers. Credit terms extended to retailers are 30 days. The average inventory holding period is 45 days and the wholesaler pays the manufacturer on receipt of goods (average payment period 15 days).

Question Parts

( a )
Determine the listed price per unit that will give the wholesaler a 20 % profit margin on total cost, and state the selling price to retailers after the 15 % trade discount.
( b )
Using the selling price obtained in part (a), compute the break‑even volume of units for the quarter.
( c )
Calculate the cash conversion cycle (CCC) for the wholesaler with the given credit terms, and explain the effect on the CCC if the credit period is reduced from 30 days to 15 days.

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About This Question

This is Neco Model Questions Vol1 2023 Commerce Question 6. It is one of the essay questions from the 2023 Neco Model Questions Vol1 Commerce examination.

The question covers Wholesale Trade .

View More Neco Model Questions Vol1 2023 Commerce Questions More Neco Model Questions Vol1 Practice Questions Back to Questions

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