Practice waec model questions vol1 commerce 2018 Past Questions

Question 1 View Details

A wholesaler purchases goods at a cost price of ₦1,000 per unit. He marks up the goods by 30 % to obtain the marked price. He then gives a trade discount of 10 % on the marked price and, if the buyer pays within 15 days, a cash discount of 2 % on the discounted price. In addition, he pays a commission of 5 % of the selling price to a sales agent. What is the net profit percentage on the original cost price? Express your answer to two decimal places.

A. 9.12

B. 10.05

Correct C. 8.93

D. 7.85

Correct Answer: C

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Question 2 View Details

An investor buys 200 shares of Company X at ₦150 each, paying a brokerage fee of 0.25 % of the transaction value. He later buys another 150 shares at ₦165 each, again paying the same brokerage fee. After a month the market price rises to ₦180 per share and he sells all his shares, paying the same brokerage fee on the sale. What is his overall percentage profit on the total amount he initially invested (including all brokerage fees)? Give the answer to two decimal places.

A. 12.30

B. 13.75

Correct C. 14.49

D. 15.20

Correct Answer: C

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Question 3 View Details

A wholesaler can transport goods by two alternatives. Option A: fixed cost per trip ₦5,000 plus a variable cost of ₦120 per ton. Option B: no fixed cost, variable cost of ₦150 per ton, but a 10 % discount on the variable cost for any shipment exceeding 40 tons. If the wholesaler needs to ship 50 tons, which option gives the lower total cost? Also determine the tonnage at which both options would cost the same (break‑even point). Give the break‑even tonnage to two decimal places.

A. Option B; break‑even tonnage ≈ 350.00 tons

B. Option A; break‑even tonnage ≈ 310.50 tons

C. Option A; break‑even tonnage ≈ 250.00 tons

Correct D. Option B; break‑even tonnage ≈ 293.33 tons

Correct Answer: D

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Question 4 View Details

An insurance company offers fire insurance for a warehouse with a sum insured of ₦2,000,000. The base premium rate is 0.35 % of the sum insured. A loading of 12 % is added for the high‑risk location, then a government tax of 5 % is applied to the loaded premium. The policyholder has a no‑claim bonus that gives a 10 % discount on the tax‑inclusive premium. What is the final annual premium payable? State your answer in naira to two decimal places.

A. 7550.55

B. 7200.00

C. 8000.00

Correct D. 7408.80

Correct Answer: D

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Question 5 View Details

A small business requires ₦5,000,000 for expansion. It can obtain finance from three sources: 1. Bank loan: interest 12 % per annum, processing fee 1 % of the loan amount, repayable in equal annual installments over 3 years. 2. Trade credit from suppliers: 0 % interest if paid within 60 days, but a penalty of 2 % of the amount due is charged for each month of delay beyond 60 days. The business expects to delay payment by exactly 2 months. 3. Issue of 5‑year corporate bonds: nominal interest 10 % per annum payable annually, issuance cost 2 % of the total bond issue. Assuming the business will use the funds for exactly one year and then repay the principal, calculate the effective cost (as a percentage of the amount borrowed) for each source for that year and identify which source is cheapest.

A. Bank loan: 12%; Trade credit: 5%; Bonds: 13%; Cheapest: Trade credit

B. Bank loan: 14%; Trade credit: 4%; Bonds: 11%; Cheapest: Bonds

C. Bank loan: 13%; Trade credit: 6%; Bonds: 12%; Cheapest: Bank loan

Correct D. Bank loan: 13%; Trade credit: 4%; Bonds: 12%; Cheapest: Trade credit

Correct Answer: D

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Question 6 View Details

Partner A initially invests ₦9,000 for 6 months and then adds ₦6,000 to his capital for the next 4 months. Partner B invests ₦12,000 for the whole 10‑month period. The partnership earned a total profit of ₦7,800 which is to be shared in proportion to each partner's capital multiplied by the time it was invested. What amount of profit does Partner A receive?

A. 4200

Correct B. 3800

C. 3075

D. 3500

Correct Answer: B

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Question 7 View Details

A business's cash book shows a debit balance of ₦45,600. The bank statement closing balance is a credit of ₦44,800. The following items are noted: outstanding checks amount to ₦3,200; deposits in transit amount to ₦2,500; the bank charged ₦150 for service fees which have not been recorded in either the cash book or the bank statement; a cheque of ₦1,200 was mistakenly recorded in the cash book as ₦2,100; and a cheque of ₦600 was omitted from the cash book. After making all necessary adjustments, what is the corrected cash book balance?

A. 45150

B. 43500

C. 44250

Correct D. 43950

Correct Answer: D

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Question 8 View Details

A retailer has fixed costs of ₦50,000 per month. The variable cost per unit is ₦200 and the selling price per unit is ₦300. How many units must be sold each month to break even?

A. 550

Correct B. 500

C. 600

D. 400

Correct Answer: B

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Question 9 View Details

A wholesaler purchases goods with an invoice amount of ₦150,000. He receives a trade discount of 10% on the invoice and, if he pays within 10 days, a cash discount of 2% on the amount after the trade discount. He then sells the goods at a markup of 25% on his net cost. What profit does the wholesaler make on the transaction?

A. 33000

B. 33750

C. 37500

Correct D. 33075

Correct Answer: D

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Question 10 View Details

A manager must send a confidential report worth ₦200,000 to a branch 800 km away. He can either use a courier that costs ₦5,000 and takes 3 days with no risk of loss, or electronic mail that costs ₦2,000 but carries a 5 % chance of the report being intercepted and lost (in which case the full value is lost). Considering expected monetary loss, which method should he choose?

A. Electronic mail

B. Both methods are equally risky

Correct C. Courier

D. Neither method; wait for a safer option

Correct Answer: C

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Question 11 View Details

A retailer buys an item at an unknown cost price (CP). He marks the item up by a certain percentage m to obtain the marked price (MP). He then offers a discount of 20% on MP and sells the item for ₦12,000, earning a profit of 15% on the cost price. What is the markup percentage m?

A. 40%

B. 50%

Correct C. 43.75%

D. 45%

Correct Answer: C

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Question 12 View Details

An importer purchases 5,000 kg of wheat. The FOB price is $0.45 per kg and freight & insurance cost $0.08 per kg. A tariff of 15% is levied on the CIF value. The exchange rate is ₦410 per $. The importer wants a profit of 20% on the total landed cost. What should be the selling price per kg in Naira?

A. ₦250

B. ₦350

Correct C. ₦300

D. ₦280

Correct Answer: C

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Question 13 View Details

A Nigerian exporter sells 200,000 units abroad. The foreign buyer pays in euros. The exporter incurs local costs of ₦1,200 per unit. The government imposes a 5% export tax on the foreign currency receipts. The exporter wishes to earn at least a 25% profit on total cost (including tax). What is the minimum selling price per unit in euros that meets this requirement?

Correct A. €3.43

B. €4.00

C. €3.60

D. €3.20

Correct Answer: A

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Question 14 View Details

A company has a total advertising budget of ₦2,000,000. TV ads cost ₦150,000 per spot and reach 120,000 viewers per spot. Radio ads cost ₦30,000 per spot and reach 10,000 listeners per spot. The company wants to reach at least 1,200,000 people. The remaining budget after buying TV spots is spent on radio spots. What is the minimum number of TV spots the company must purchase to meet the reach target?

A. 9

B. 6

Correct C. 8

D. 7

Correct Answer: C

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Question 15 View Details

An insurance company offers fire insurance. The basic premium is 0.35% of the sum insured. A loading of 12% is added to the basic premium, then a government tax of 5% is applied to the loaded premium. A discount of 10% is granted on the final amount only if the premium after tax exceeds ₦30,000; otherwise no discount is given. For a building with a sum insured of ₦8,000,000, what is the annual premium payable after any applicable discount?

A. ₦31,281.60

B. ₦28,224.00

Correct C. ₦29,635.20

D. ₦29,400.00

Correct Answer: C

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Question 16 View Details

A borrower obtains a loan of ₦500,000 at simple interest 12% per annum payable annually. After 2 years the borrower refinances the outstanding balance at 10% per annum compound interest, payable annually, for a further 3 years. What is the total amount payable at the end of the 5‑year period?

A. ₦810,300

B. ₦842,500

C. ₦795,000

Correct D. ₦825,220

Correct Answer: D

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Question 17 View Details

A firm requires ₦10,000,000 for a project. It can raise equity at a cost of 15% and a bank loan at a nominal interest rate of 12% per annum. The corporate tax rate is 30%, and interest is tax‑deductible. The firm decides to finance 40% of the required amount with equity and the remaining 60% with debt. What is the weighted average cost of capital (WACC) for the project (expressed as a percentage)?

A. 10.80%

B. 9.75%

Correct C. 11.04%

D. 12.30%

Correct Answer: C

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Question 18 View Details

A trader imports goods whose invoice value is ₦2,500,000. Freight charges are 5% of the invoice value and insurance is 2% of the sum of the invoice value and freight. What is the total landed cost of the goods?

A. ₦2,680,000

Correct B. ₦2,677,500

C. ₦2,625,000

D. ₦2,675,000

Correct Answer: B

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Question 19 View Details

A company wants to run a promotional campaign using TV and radio ads. Each TV ad costs ₦150,000 and reaches 20,000 viewers. Each radio ad costs ₦30,000 and reaches 5,000 listeners. Because 25% of TV viewers also listen to the radio, there is an overlap of 25% of the TV audience with the radio audience. The company needs to reach at least 200,000 unique viewers and may purchase any integer number of each type of ad. What is the minimum total cost required to achieve the target unique reach?

A. ₦1,350,000

B. ₦1,620,000

Correct C. ₦1,200,000

D. ₦1,500,000

Correct Answer: C

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Question 20 View Details

An exporter is paid under a documentary letter of credit for ₦5,000,000, which is to be drawn in US dollars at the prevailing exchange rate of ₦360 per $1. The exporter wishes to discount the L/C at a bank that charges a discount rate of 8% per annum on the dollar amount for a period of 45 days (actual/360). The bank also imposes a handling fee equal to 0.5% of the discounted dollar amount. How much in Naira will the exporter receive after discounting and fees?

A. ₦4,925,930

Correct B. ₦4,925,250

C. ₦4,950,000

D. ₦4,925,000

Correct Answer: B

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Question 21 View Details

A company plans an advertising campaign for a single product. The campaign incurs a fixed advertising cost of ₦500,000 for Product X and a variable advertising cost equal to 2% of the gross sales generated from Product Y. The expected sales increase from the campaign is 600 units of Product X and 300 units of Product Y. Each unit of Product X sells for ₦14,000 and yields a contribution margin of 22% of its selling price. Each unit of Product Y sells for ₦25,000 and yields a contribution margin of 18% of its selling price. The company wants the overall Advertising Efficiency Index (AEI), defined as total advertising cost divided by total contribution from both products, to be exactly 0.25. Determine the additional fixed advertising cost (in whole naira) that must be added to the variable cost of Product Y to achieve the target AEI. Round the answer to the nearest thousand naira.

Correct A. 150000

B. 130000

C. 160000

D. 140000

Correct Answer: A

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Question 22 View Details

A consumer goods item has a production cost of ₦8,000 per unit. Under the Consumer Protection Act, the selling price may not exceed the production cost plus a 25% profit margin, and any price increase after the first year must not exceed the annual inflation rate of 6% compounded each year. The item was sold at ₦10,000 in 2022. In 2024 the retailer raised the price to ₦12,500. Determine whether the 2024 price complies with both regulations. If it does not, calculate the maximum legal price under each rule and state which rule is more restrictive.

A. Unlawful, legal price ₦9,500, excess ₦3,000

B. Unlawful, legal price ₦10,500, excess ₦2,000

Correct C. Unlawful, legal price ₦10,000, excess ₦2,500

D. Lawful, legal price ₦10,000, excess ₦2,500

Correct Answer: C

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Question 23 View Details

A wholesaler transports goods from a port to a warehouse located 350 km away. The freight tariff is tiered: the first 100 km are charged at ₦150 per km, the next 200 km at ₦120 per km, and any remaining distance at ₦100 per km. Because the load exceeds 20 tonnes, a discount of 10% on the total distance charge is granted. The load for this shipment is 25 tonnes. Calculate the total transportation cost for the shipment.

A. 40500

Correct B. 39600

C. 42500

D. 44000

Correct Answer: B

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Question 24 View Details

A retailer stores a product in a warehouse. Annual demand for the product is 12,000 units. The ordering cost per order is ₦5,000. Holding cost equals 20% of the unit cost per year. The standard unit cost is ₦2,000, but the supplier offers a price break: if the order quantity is at least 600 units, the unit cost falls to ₦1,800. The warehouse can hold a maximum of 800 units at any time. Using the Economic Order Quantity (EOQ) model and considering the price break, determine the order quantity that minimises the total annual inventory cost (including purchase cost, ordering cost and holding cost) and compute that minimum total cost. Provide the optimal order quantity (in units) and the corresponding total annual cost (in naira).

A. 600 units, 21820000

B. 548 units, 24219085

Correct C. 600 units, 21808000

D. 600 units, 24220000

Correct Answer: C

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Question 25 View Details

A retailer purchases 200 identical items for a total of ₦1,200,000. He intends to apply a markup of 30% on the cost price to set the initial selling price. During a promotional period he offers a 12% discount on this selling price for all items sold. A sales tax of 5% is then added to the discounted price at the point of sale. Determine the final price a customer pays for one item during the promotion, and compute the retailer's net profit per item after accounting for the tax (assume the tax is remitted to the government and does not form part of profit). Provide the final price and the net profit per item.

Correct A. Final price ₦7207, profit per item ₦864

B. Final price ₦7350, profit per item ₦900

C. Final price ₦6864, profit per item ₦864

D. Final price ₦7207, profit per item ₦1207

Correct Answer: A

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