An online retailer receives 150 sales per day, with the average sale amounting to N34. However, after advertising through an affiliate, the retailer has gained
an extra 25 sales per day, with the affiliate being given 15% commission on the revenue generated through the affiliate. Assuming that the profit margins on
the retailers product is 30% (not including commission fees), how much profit is now generated by the online retailer per week?
2011
Answers
Step 1– Calculate the profit generated by the sales not generated through the affiliate bymultiplying the number of sales (150) by the average sale amount (£34), then multiply thisfigure by 30% (0.3) to identify the profit.150 x £34 = £5,100£5,100 x 0.3 = £1,530
Step 2– Calculate the profit generated by the affiliate’s sales by multiplying the number ofsales by the average sale amount, deducting the affiliate’s commission and then multiplyingthat figure by 30% to identify the profit.25 x £34 = £850£850 - (£850 x 0.15) = £722.50£722.50 x 0.3 = £216.75
Step 3– Calculate the total profit generated by combining the profits made through the mainwebsite (£1,530) with the profits generated through the affiliate (£216.75).£1,530 + £216.75 = £1,746.75Thus the correct answer is (A) £1,746.75