waec model questions vol1 2021 commerce | Essay

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Question 1 View Details
Commerce is the activity that links producers and consumers in an economy.
Question Parts
(a)
Define commerce and list its four major components.
(b)
Explain how each component contributes to the national income of Nigeria.
(c)
Discuss two ways in which modern e‑commerce has changed traditional commerce in Nigeria.
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Question 2 View Details
A Nigerian cocoa farmer aggregates 10,000 kg of cocoa beans and sells them to a foreign processing company. The agreed FOB price is ₦150 per kg. The current exchange rate is ₦800 = $1. The shipment will incur freight of $1,200 and insurance of $300, payable in dollars. The importing country imposes a 10% import duty on the value of the cocoa in dollars, calculated on the FOB price after conversion. The exporter also pays a 5% export tax on the FOB value in Naira.
Question Parts
(a)
Calculate the total revenue in dollars that the exporter will receive after converting the FOB price, adding freight and insurance, and deducting the import duty and export tax. Show all steps.
(b)
If the exchange rate rises to ₦850 = $1, recalculate the total revenue in dollars, assuming all other costs remain unchanged. Comment on the effect of the exchange‑rate movement on the exporter’s earnings.
(c)
Based on the calculations, recommend whether the exporter should lock in the exchange rate using a forward contract, providing two reasons.
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Question 3 View Details
A small retailer in Lagos purchases a batch of 500 units of a popular electronic gadget at a total cost of ₦750,000. The retailer plans to sell the gadgets in three phases:
Question Parts
(a)
If the retailer intends to apply a markup of 40 % on the unit cost for the first 200 units, calculate the selling price per unit for these 200 units and the total revenue expected from this batch.
(b)
For the next 150 units the retailer offers a promotional discount of 10 % on the selling price calculated in part (a). Determine the discounted selling price per unit and the revenue generated from these 150 units.
(c)
The remaining 150 units are sold at a price that yields an overall gross profit margin of 25 % on the whole batch of 500 units. Find the required selling price per unit for these last 150 units. Then, discuss briefly how the retailer’s three‑phase pricing strategy affects cash flow and inventory turnover.
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Question 4 View Details
A Nigerian import‑export firm plans to import 2,000 kilograms of cocoa beans from Ghana. The FOB (Free on Board) price quoted by the Ghanaian supplier is US$2.20 per kilogram. The current exchange rate is ₦460 per US$. The firm must also pay a 5 % import duty, a 2 % value‑added tax (VAT) on the landed cost, and a handling charge of ₦12,000 per shipment.
Question Parts
(a)
Calculate the total cost in Naira that the firm will incur to bring the cocoa beans into Nigeria (landed cost), showing all intermediate steps.
(b)
If the firm intends to earn a net profit margin of 18 % on the landed cost, determine the minimum selling price per kilogram in Naira.
(c)
Assume the Naira depreciates to ₦480 per US$ before the shipment arrives, while all other charges remain unchanged. Re‑calculate the landed cost and discuss the impact of exchange‑rate fluctuation on the firm’s profitability and pricing strategy.
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Question 5 View Details
A retail shop sells two product lines, A and B. The following data relate to a typical month:
Question Parts
(a)
Calculate the contribution margin per unit for product A and product B.
(b)
Using the expected sales mix of 300 units of A and 150 units of B per month, determine the weighted‑average contribution margin per unit.
(c)
The shop incurs fixed overheads of ₦1,200,000 per month. Calculate the overall break‑even point in units and allocate the break‑even units to products A and B according to the sales mix.
(d)
If the selling price of product A is increased by 10 % while all other variables remain unchanged, recalculate the break‑even units for product A and product B and comment on the effect of the price change.
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Question 6 View Details
A wholesaler purchases a batch of 500 units of a commodity. The list price is ₦12,000 per unit. The supplier offers a trade discount of 5 % on the list price. Freight and insurance cost ₦200 and ₦100 per unit respectively. The wholesaler sells the commodity at a list selling price of ₦14,500 per unit and offers a cash discount of 2 % for payment within 10 days.
Question Parts
(a)
Determine the net cost per unit after the trade discount and after adding freight and insurance.
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Question 7 View Details
XYZ Ltd is a private limited company incorporated in Nigeria in 2015. The board is considering converting the company into a public limited company (PLC) in order to raise additional capital for expansion. At the same time, the board is evaluating a possible partnership with a foreign firm to obtain technical expertise.
Question Parts
(a)
Explain the key differences between a private limited company and a public limited company in terms of formation, share capital, and regulatory requirements.
(b)
Discuss three advantages and three disadvantages of converting XYZ Ltd into a public limited company.
(c)
The board wishes to form a partnership with a foreign firm to obtain technical expertise. Identify the type of business organization that would best suit this arrangement and justify your choice, taking into account liability, control and profit‑sharing considerations.
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Question 8 View Details
ABC Enterprises is a start‑up manufacturing firm that needs ₦120,000,000 to purchase new machinery. The firm is evaluating three sources of finance: 1. A bank term loan at 12 % per annum payable over 5 years. 2. Issuing 10,000 ordinary shares at ₦12 each (the current market price is ₦10 per share) with an expected dividend yield of 8 % per annum. 3. Leasing the machinery with an annual lease payment of ₦28,000,000 for 5 years and a residual value of ₦20,000,000 payable at the end of the lease term. The corporate tax rate is 30 % and the firm’s required rate of return on equity is 15 %.
Question Parts
(a)
Calculate the after‑tax cost of the bank term loan.
(b)
Using the dividend discount model (assuming zero growth), calculate the cost of equity for the new shares and state whether this cost meets the firm’s required rate of return on equity.
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