Respuesta :
Revenue: $500,000
Shoes: $250,000
Shoe boxes: $1,000
Advertising: $500
Rent: $1,000
Depreciation: $25
Knowing she has sold 5,000 pairs, assume the company wants to launch a Black Friday promotion, where she would discount her shoes by 10%. How many more shoes would she have to sell to justify this promotion?
A. 25.13% more shoes
B. 20.08% more shoes
C. None of the above, but I could calculate this with the information I am given.
D. None of the above, I cannot calculate this with the information I am given.
Answer:
Option A. 25.13% more shoes
Explanation:
Cost Benefit analysis would be useful here to acknowledge what percentage of shoe sales is required to justify the promotion.
The Benefit drawn before 10% promotion proposal:
Revenue: $500,000
Shoes: ($250,000)
Shoe boxes: ($1,000)
Advertising: ($500)
Rent: ($1,000)
Depreciation: ($25)
Profit $247,475
The Benefit drawn before 10% promotion proposal:
Revenue: $450,000
Shoes: ($250,000)
Shoe boxes: ($1,000)
Advertising: ($500)
Rent: ($1,000)
Depreciation: ($25)
Profit $197,475
Now we can calculate how much additional sales must be required to justify the promotion.
Sales Increase Required = (Initial Profit - Before Promotion) / Profit After Promotion
Sales Increase Required = ($247,475 - $197,475) / $197,475
Sales Increase Required = 25.31% which is close to option 1, hence Option 1 is correct here.
Promotion is termed as the activity that involves the spreading or publicizing of information regarding the products and services. It is a part of marketing that involves publicity and public relations between the customers.
The correct option is A. 25.13% more shoes
Cost Benefit analysis would be useful here to acknowledge what percentage of shoe sales is required to justify the promotion.
The Benefit drew before 10% promotion proposal:
Revenue: $500,000
Shoes: ($250,000)
Shoe boxes: ($1,000)
Advertising: ($500)
Rent: ($1,000)
Depreciation: ($25)
Profit $247,475
The Benefit drew before 10% promotion proposal:
Revenue: $450,000
Shoes: ($250,000)
Shoe boxes: ($1,000)
Advertising: ($500)
Rent: ($1,000)
Depreciation: ($25)
Profit $197,475
Now we can calculate how much additional sales must be required to justify the promotion.
Sales Increase Required = [tex]\frac{\text{Initial Profit - Before Promotion}}{\text{Profit After Promotion}}[/tex]
Sales Increase Required = [tex]\frac{\$247,475-\$197,475}{\$197,475}[/tex]
Sales Increase Required = 25.31% which is close to option 1, hence Option 1 is correct here.
To know more about the promotional activities, refer to the link below:
https://brainly.com/question/15869831
