Neco Model Questions Vol1 2024 Commerce Question 5

Practice essay / theory question 5 from the 2024 Neco Model Questions Vol1 Commerce examination. This question covers Retail Trade .

Neco Model Questions Vol1 2024 Commerce Essay / Theory
Topic: Retail Trade
Question 5 NECO_MODEL_QUESTIONS_VOL1 • 2024 • COMMERCE • essay

A retail shop sells a single product. For the month of March the following data are recorded: - Selling price per unit: ₦2,500 - Variable cost per unit (cost of goods sold): ₦1,600 - Fixed costs (rent, salaries, utilities): ₦540,000 - Average monthly sales volume: 350 units Using the above information, answer the questions that follow.

Question Parts

( a )
Determine the gross profit earned on each unit and express the gross profit margin as a percentage of the selling price.
( b )
Calculate the break‑even sales volume in units for the month.
( c )
If the variable cost per unit rises by 10% because of a supplier price increase, recalculate the break‑even volume. State the percentage increase in break‑even units compared with part (b).
( d )
The retailer is considering two alternatives to keep profit levels while reducing the break‑even volume: (i) Increase the selling price by 5% while keeping costs unchanged. (ii) Keep the selling price unchanged but reduce the variable cost by 5% through efficiency measures. For each alternative, compute the new break‑even volume and recommend which alternative is more effective in lowering the break‑even units.

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About This Question

This is Neco Model Questions Vol1 2024 Commerce Question 5. It is one of the essay questions from the 2024 Neco Model Questions Vol1 Commerce examination.

The question covers Retail Trade .

View More Neco Model Questions Vol1 2024 Commerce Questions More Neco Model Questions Vol1 Practice Questions Back to Questions

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