This economics question tests your understanding of economic models and analysis. The step-by-step answer below applies the relevant framework and explains the reasoning.
ScanSolve AI Answer
Step 1: Calculate the base monthly sales revenue for each product. The expected monthly sales for Body Butter are 6,000 units at R250 per unit. The expected monthly sales for Face Serum are 4,000 units at R400 per unit. Body Butter Revenue = 6,000 units × R250/unit = R1,500,000 Face Serum Revenue = 4,000 units × R400/unit = R1,600,000 Total Base Monthly Sales Revenue = R1,500,000 + R1,600,000 = R3,100,000 Step 2: Calculate the budgeted cash sales for April. No special conditions apply to April. 75% of sales are collected immediately as cash sales. Total Sales Revenue for April = R3,100,000 Cash Sales for April = R3,100,000 × 0.75 = R2,325,000 Step 3: Calculate the budgeted cash sales for May. A promotional campaign in May offers a 10% price reduction. This applies to all sales in May. New Selling Price for Body Butter = R250 × (1 - 0.10) = R225/unit New Selling Price for Face Serum = R400 × (1 - 0.10) = R360/unit Body Butter Revenue for May = 6,000 units × R225/unit = R1,350,000 Face Serum Revenue for May = 4,000 units × R360/unit = R1,440,000 Total Sales Revenue for May = R