Practice waec model questions vol1 commerce 2022 Past Questions

Question 1 View Details

A company sells a product for ₦500 each. The variable cost per unit is ₦300. Currently it sells 2,000 units per month. It is considering an advertising campaign that costs a fixed amount X (in naira) plus a promotional cost of ₦20 for each unit sold as a result of the campaign. For every ₦10,000 spent on advertising (excluding the per‑unit promotional cost) the company expects its sales to increase by 5%. Determine the minimum advertising spend (rounded up to the nearest thousand naira) required to raise the monthly profit by at least ₦150,000 compared with the present profit.

A. ₦230,000

Correct B. ₦238,000

C. ₦240,000

D. ₦250,000

Correct Answer: B

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Question 2 View Details

A trader buys 50 kg of rice at ₦1,200 per kg. He receives a 2% discount on the total purchase price (excluding transport) and pays a transport charge of ₦15,000. He sells the rice at ₦1,800 per kg but gives a 5% discount to customers on the selling price. What is the trader's net profit?

A. ₦13,200

B. ₦10,500

Correct C. ₦11,700

D. ₦12,300

Correct Answer: C

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Question 3 View Details

A retailer has an annual demand of 12,000 units for a product. The ordering cost per order is ₦8,000. The unit cost is ₦2,500 and the holding cost is 15% of the unit cost per year. The warehouse can store at most 1,200 units at any time. Determine the order quantity that minimises total annual cost while respecting the storage limit, and compute the resulting total annual cost.

A. Order quantity = 716 units; Total annual cost = ₦31,000,000

B. Order quantity = 800 units; Total annual cost = ₦31,500,000

Correct C. Order quantity = 716 units; Total annual cost = ₦30,268,322

D. Order quantity = 650 units; Total annual cost = ₦29,800,000

Correct Answer: C

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Question 4 View Details

A group of three entrepreneurs wants to start a business that will (i) limit their personal liability, (ii) allow them to raise capital of at least ₦10 million, and (iii) continue operating after the death of any one partner. The possible forms of business are: sole proprietorship, partnership, and private limited company. Which form best satisfies all three requirements?

Correct A. Private limited company

B. Partnership

C. Limited partnership

D. Sole proprietorship

Correct Answer: A

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Question 5 View Details

A firm's current capital structure is 60% equity (cost 12% p.a.), 30% long‑term loan (cost 9% p.a.) and 10% short‑term loan (cost 11% p.a.). The firm plans to raise an additional ₦5 million by issuing new equity, which will increase the equity proportion to 70% while reducing the long‑term loan proportion to 20% (the short‑term loan proportion remains 10%). Compute the current weighted average cost of capital (WACC) and the new WACC after the change. Which financing arrangement results in a lower overall cost?

Correct A. Current WACC = 11.0%; New WACC = 11.3%; Current financing is cheaper

B. Current WACC = 11.0%; New WACC = 11.3%; New financing is cheaper

C. Current WACC = 10.8%; New WACC = 11.5%; New financing is cheaper

D. Current WACC = 11.2%; New WACC = 11.0%; New financing is cheaper

Correct Answer: A

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Question 6 View Details

A wholesaler purchases a product whose list price is ₦5,000 per unit. He receives a trade discount of 12% on the list price and, if he pays within 10 days, an additional cash discount of 5% on the discounted price. He also pays a commission of 2% of the amount after all discounts to his sales agent. The wholesaler then marks up his total cost (discounted price plus commission) by 30% to determine his selling price. What is the selling price per unit (in Naira) that he should charge?

A. 5,300.00

B. 5,450.12

C. 5,600.00

Correct D. 5,542.68

Correct Answer: D

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Question 7 View Details

A company wants to reach at least 5,000 people with a promotional message. It can use two channels: (i) a social‑media post that costs ₦2,000 and is expected to be shared on average by 8 friends; each of those friends shares the post further with probability 0.25, and each successful share reaches 8 new friends, and (ii) individual SMS messages that cost ₦15 each and reach exactly one recipient. If the company posts one social‑media message, what is the minimum number of SMS messages it must send to achieve the target reach?

Correct A. 4,975

B. 4,950

C. 5,000

D. 4,976

Correct Answer: A

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Question 8 View Details

A retailer buys a batch of 200 identical items for a total cost of ₦40,000. He sells each item for ₦250. What is the total profit earned from selling the whole batch?

A. 15,000

B. 12,500

Correct C. 10,000

D. 5,000

Correct Answer: C

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Question 9 View Details

Three partners, A, B and C, invest capital in a business for different periods. A invests ₦50,000 for 6 months, B invests ₦30,000 for 9 months, and C invests ₦20,000 for 12 months. At the end of the year the business makes a profit of ₦84,000. Assuming profit is shared in proportion to the product of capital and time (capital‑months), how much profit does each partner receive?

A. A:42,000; B:25,200; C:16,800

B. A:31,000; B:28,000; C:25,000

Correct C. A:31,111; B:28,000; C:24,889

D. A:18,667; B:28,000; C:37,333

Correct Answer: C

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Question 10 View Details

A retail store experiences an average daily demand of 45 units for a certain product. Daily demand is normally distributed with a standard deviation of 8 units. The supplier's lead time is 5 days. The store wishes to maintain a 95 % service level (i.e., a 95 % probability of no stock‑out during the lead time). Using a Z‑value of 1.65 for a 95 % service level, what should be the reorder point (in units) for this product?

Correct A. 255

B. 270

C. 260

D. 245

Correct Answer: A

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Question 11 View Details

A life insurance company offers a policy with a sum assured of ₦500,000. The net premium is calculated at 0.8% of the sum assured per annum. The company adds a loading of 15% on the net premium to cover expenses and profit. If a policyholder pays the premium annually in advance and receives a 10% discount on the gross premium (net premium plus loading), and a tax of 5% is then applied to the discounted premium, how much does the policyholder actually pay each year?

Correct A. 4347

B. 4140

C. 435

D. 4370

Correct Answer: A

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Question 12 View Details

A retailer purchases 300 units of a product for a total cost of ₦180,000. He marks up each unit by 25% on the unit cost and then offers a trade discount of 10% on the marked price. A sales tax of 5% is added on the discounted selling price. If the retailer has fixed monthly overheads of ₦15,000, how many units must be sold to break even (i.e., zero profit)?

A. 100

B. 80

C. 200

Correct D. 138

Correct Answer: D

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Question 13 View Details

A small firm needs to raise exactly ₦2,000,000 for a new project. Option A is a bank loan of ₦2,000,000 with an annual interest rate of 12% and a one‑time processing fee of 2% of the loan amount. Option B is to issue new shares at a nominal value of ₦250 each, promising an annual dividend of 8% of the nominal value per share. A flotation cost of 3% of the total issue price is charged on the share issue. Determine which source of finance has the lower annual cost and state the annual cost percentage for that source.

A. Bank loan - about 8.00% per year

B. Bank loan - about 12.5% per year

Correct C. Shares (equity) - about 8.25% per year

D. Shares (equity) - about 9.00% per year

Correct Answer: C

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Question 14 View Details

A consumer bought a refrigerator for ₦120,000, which included VAT at the rate of 7.5%. The refrigerator comes with a 2‑year manufacturer's warranty. After 18 months the appliance fails due to a defect. Under the Consumer Protection Act, the seller must refund the consumer the depreciated value of the refrigerator, calculated on a straight‑line basis over an estimated useful life of 8 years, and must also add a compensation of 10% of the purchase price for inconvenience and a penalty of 5% of the purchase price if a replacement is not provided within 30 days. What is the total cash refund the consumer is entitled to receive?

A. 108000

B. 106500

Correct C. 107442

D. 105000

Correct Answer: C

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Question 15 View Details

An importer wishes to purchase 5,000 units of a product priced at US$12 per unit. The current exchange rate is ₦460 per US$. The import duty is 20% of the CIF (cost, insurance, freight) value, and a surcharge of 5% is levied on the duty amount. If the importer pays the total amount within 10 days, a discount of 2% is granted on the sum of the CIF value, duty, and surcharge. What is the total amount in Naira that the importer must pay after the discount?

A. 33810000

Correct B. 32728080

C. 33396000

D. 32457600

Correct Answer: B

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Question 16 View Details

A small retail shop has fixed monthly costs of ₦50,000. The variable cost of each item sold is ₦2,500 and the selling price per item is ₦3,500. How many items must the shop sell in a month to break even?

A. 65 items

B. 55 items

Correct C. 50 items

D. 45 items

Correct Answer: C

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Question 17 View Details

A logistics company offers two transport options for a single trip. Option A charges a fixed fee of ₦20,000 per trip plus ₦150 per kilometre. Option B has no fixed fee but charges ₦250 per kilometre.\n(a) At what distance will the total cost of the two options be the same?\n(b) For a 350 km trip, which option is cheaper and by how much?

A. Option B is cheaper by ₦15,000

B. Option A is cheaper by ₦10,000

C. Option B is cheaper by ₦5,000

Correct D. Option A is cheaper by ₦15,000

Correct Answer: D

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Question 18 View Details

A delivery truck consumes 30 litres of fuel per 100 km when empty. For every additional 1,000 kg of load, fuel consumption rises by 0.2 litres per 100 km. The truck carries a load of 5,000 kg on a 240 km journey. If fuel costs ₦150 per litre, what is the total fuel expense for the trip?

A. ₦11,340

B. ₦14,400

C. ₦10,800

Correct D. ₦11,160

Correct Answer: D

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Question 19 View Details

Two mobile telephone plans are available.\nPlan X: Monthly subscription ₦5,000. First 200 minutes are charged at ₦30 per minute; any additional minutes are charged at ₦20 per minute. If total minutes in a month exceed 500, a 10 % discount is applied to the whole monthly bill (including the subscription).\nPlan Y: No subscription fee. All minutes are charged at ₦25 per minute, but a flat discount of ₦2,000 is given if total minutes exceed 400.\nFor a month in which a user makes 620 minutes of calls, determine which plan is cheaper, the amount saved, and the effective cost per minute of the cheaper plan (rounded to two decimal places).

A. Plan Y is cheaper by ₦3,500; effective cost per minute = ₦21.77

B. Plan X is cheaper by ₦1,200; effective cost per minute = ₦22.50

C. Plan Y is cheaper by ₦3,960; effective cost per minute = ₦22.00

Correct D. Plan Y is cheaper by ₦3,960; effective cost per minute = ₦21.77

Correct Answer: D

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Question 20 View Details

A courier service charges a base fee of ₦10,000 per trip, a distance charge of ₦100 per kilometre, and a driver wage of ₦2,000 per hour. The driver may travel at any constant speed between 40 km/h and 80 km/h. Fuel consumption per kilometre increases linearly with speed: at 40 km/h the truck uses 0.2 litre per kilometre, and for each additional km/h the consumption rises by 0.005 litre per kilometre. Fuel costs ₦150 per litre. For a delivery distance of 240 km, what speed should be chosen to minimise the total cost and what is that minimum cost (rounded to the nearest naira)?

A. Speed = 55 km/h; Minimum cost = ₦28,300

B. Speed = 45 km/h; Minimum cost = ₦28,900

C. Speed = 60 km/h; Minimum cost = ₦29,200

Correct D. Speed = 50 km/h; Minimum cost = ₦28,600

Correct Answer: D

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Question 21 View Details

A company has an annual demand of 12,000 units for a product. The ordering cost is ₦500 per order. The holding cost is 25 % of the unit cost per year. The unit cost is ₦200, but if an order quantity exceeds 800 units the supplier offers a 5 % discount on the unit cost. The warehouse can hold at most 1,000 units. Determine the order quantity that minimises the total annual cost while respecting the warehouse capacity, and state the resulting total annual cost.

A. Order quantity = 750 units; total annual cost = ₦2,426,750

Correct B. Order quantity = 800 units; total annual cost = ₦2,306,500

C. Order quantity = 800 units; total annual cost = ₦2,427,500

D. Order quantity = 900 units; total annual cost = ₦2,308,042

Correct Answer: B

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Question 22 View Details

A company's shares are currently trading at ₦150 per share with 2 million shares outstanding. The company announces a 1‑for‑4 rights issue at a subscription price of ₦120 per share. Existing shareholders may subscribe in proportion to their holdings. The company also declares a dividend of ₦12 per share payable after the rights issue. If the net profit after the rights issue is expected to be ₦180 million, determine (a) the theoretical ex‑rights price per share, (b) the dividend yield based on that ex‑rights price, and (c) the new earnings per share.

A. (a) ₦144 per share; (b) 8.33 %; (c) ₦80 per share

B. (a) ₦150 per share; (b) 8.00 %; (c) ₦72 per share

Correct C. (a) ₦144 per share; (b) 8.33 %; (c) ₦72 per share

D. (a) ₦144 per share; (b) 10.00 %; (c) ₦72 per share

Correct Answer: C

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Question 23 View Details

A firm's cash book shows a closing cash balance of ₦85,000. The bank statement for the same date shows a balance of ₦78,500. The following items are identified: deposits in transit ₦5,200; outstanding cheques ₦3,800; bank service charges ₦150 not recorded in the cash book; a customer's cheque of ₦2,000 was returned unpaid and had been recorded in the cash book; and a cash receipt of ₦1,250 was mistakenly entered as ₦1,520 in the cash book. Prepare the bank reconciliation, giving the corrected cash book balance and the true cash balance to be shown in the statement of financial position.

A. Corrected cash book balance = ₦82,430; true cash balance = ₦79,700

B. Corrected cash book balance = ₦82,580; true cash balance = ₦80,150

Correct C. Corrected cash book balance = ₦82,580; true cash balance = ₦79,900

D. Corrected cash book balance = ₦82,730; true cash balance = ₦80,050

Correct Answer: C

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Question 24 View Details

A listed company has the following capital structure: ordinary equity - 5 million shares at a market price of ₦250 each; preference shares - 200,000 shares paying a dividend of ₦15 per share, market price ₦180; long‑term debt - ₦300 million with a yield of 9 % per annum. The corporate tax rate is 30 %. The firm plans to issue an additional 500,000 ordinary shares at a subscription price of ₦240 per share and use the proceeds to retire an equivalent amount of long‑term debt. Using the CAPM (risk‑free rate 8 %, market risk premium 6 %, beta 1.2) to estimate the cost of equity, calculate the new weighted average cost of capital (WACC) after the financing change.

A. New WACC ≈ 12.9 %

B. New WACC ≈ 14.8 %

C. New WACC ≈ 13.5 %

Correct D. New WACC ≈ 14.0 %

Correct Answer: D

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Question 25 View Details

An advertising campaign targets 60 % of a market of 2 million people with an average frequency of 3 exposures. Two media vehicles are available: Television - each spot costs ₦150,000 and delivers 120,000 impressions; Radio - each spot costs ₦45,000 and delivers 45,000 impressions. The advertiser wants to achieve the required GRPs at the lowest possible cost. Determine (a) the total GRPs required, (b) the optimal whole‑number combination of TV and radio spots that meets the GRPs at minimum cost, and (c) the total advertising budget.

A. (a) 200 GRPs; (b) 1 TV spot and 70 radio spots; (c) ₦3,900,000

B. (a) 180 GRPs; (b) 5 TV spots and 10 radio spots; (c) ₦2,250,000

C. (a) 150 GRPs; (b) 2 TV spots and 30 radio spots; (c) ₦4,050,000

Correct D. (a) 180 GRPs; (b) 0 TV spots and 80 radio spots; (c) ₦3,600,000

Correct Answer: D

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