A retailer purchases 500 shirts at ₦2,200 each. He marks them up by 30 % on cost. After two weeks he offers a seasonal discount of 12 % on the marked price to clear the stock. A sales commission of 5 % is paid on the net selling price after the discount.

(a) Compute the net profit earned from selling the entire batch.
(b) If the average inventory during the period was 250 shirts, calculate the inventory turnover ratio.

Question

A retailer purchases 500 shirts at ₦2,200 each. He marks them up by 30 % on cost. After two weeks he offers a seasonal discount of 12 % on the marked price to clear the stock. A sales commission of 5 % is paid on the net selling price after the discount.

(a) Compute the net profit earned from selling the entire batch.
(b) If the average inventory during the period was 250 shirts, calculate the inventory turnover ratio.

Accepted Answer

Net profit = ₦95,480; inventory turnover = 4,400

Waec Model Questions Vol1 2023 Commerce Question 39

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