Question 7
Neme Enterprises produced 50 pairs of trousers at N800 each and 70 pieces of shirts at N450 each. The firm sells at 10% mark-up.
Calculate the:
- Cost of producing the trousers;
- Cost of producing the shirts;
- Profit made from sales of trousers;
- Profit made from sales of shirts;
- Total profit made in the business.
Observation
Few candidates who attempted the question did not follow the arithmetical sequence the question demands.
The responses expected from candidates are:
(a) Total Cost is the overall expenditure incurred in producing a specific quantity of
goods. It is the sum of variable and fixed costs.
(b) (i) Quantity of Trousers = 50 pairs
Unit cost of production = N800
Total cost of production = quantity x unit price
= 50 x N800
= N40,000
(ii) Quantity of shirts = 70 pieces
Unit cost of production = N450
Total cost of production = Quantity x unit price
= 70 x N450 = N31,500
(iii) Profit made on producing trouser at 10%
= 10 x N40,000
100 1
= N4000
(iv) Profit made on shirts at 10%
= 10 x N31,500
100 1
= N31,500
(v) Total profit made on the venture
Profit from trouser = 4000
Profit from shirts = 3150
Total profit = 7150