Question 7
(a) What is ethical behavior by definition?
(b) State three merchandising activities.
(c) Nnanajiko Trading Enterprises; an autoparts merchant purchased alternators at different prices as shown below:
DATE |
QTY. PURCHASED |
UNIT PRICE (₦) |
January |
300 |
100.00 |
February |
350 |
110.00 |
March |
250 |
120.00 |
April |
300 |
90.00 |
May |
350 |
100.00 |
June |
200 |
120.00 |
July |
250 |
110.00 |
August |
200 |
90.00 |
If 2200 units were sold during the year, calculate:
- the total cost of alternators purchased;
- cost of goods sold using Simple Average Method.
Observation
Candidates who attempted the question performed poorly. Below are the expected responses to the question.
(a) Ethical behavior involves how businessmen should conduct themselves in doing business in order to achieve an end by gaining customers.
It is a set of behaviouralstandard, set aside for members of a society or professional body in order to achieve harmonious relationship or peaceful coexistence among them.
(b) Merchandising activities
- Packaging involving putting goods in attractive container or packs to attract consumers to buy and to also protect them from damages
- Good counter display by using point of sales materials
- Provision of sample to customers
- Product design by use of branding and attractive labels
- Product presentation and advising of customers on how to use products
- Handling of customers’ complaints
- Keeping records of business transactions
- Discounting or reducing prices of goods to attract customers
CALCULATIONS
DATE |
QTY. PURCHASED |
UNIT PRICE (₦) |
TOTAL (₦) |
January |
300 |
100.00 |
30,000.00 |
February |
350 |
110.00 |
38,500.00 |
March |
250 |
120.00 |
30,000.00 |
April |
300 |
90.00 |
27,000.00 |
May |
350 |
100.00 |
35,000.00 |
June |
200 |
120.00 |
24,000.00 |
July |
250 |
110.00 |
27,500.00 |
August |
200 |
90.00 |
18,000.00 |
TOTAL |
2200 |
840 |
230,000.00 |
- Total cost of alternators purchased = ₦230,000.00
- Average Cost = = ₦105.00
Cost of goods sold = 2200 units ₦105.00 = ₦231,000
between the company and outside world.