Question
The investors at Lovely Locks asked you to implement two specific projects to improve the financial situation. They are
a. To put all the slow and medium moving products on sale by reducing the cost by 50% and employing two temp telesales ladies to sell these to customers. They will also be responsible for making appointments for the sales team with these customers for sales on the fast moving and other products.
b. To employ a temp debtors clerk for three months to clear the outstanding debtors which is currently R 314 258.00
Use the templates below to calculate your resource costs and return on investment.
Resources
Costs
Recruitment fees
Salary
Desk and chairs
Telephones
PC's
Training
Costs of calls estimated over months
Total estimated cost
Potential Revenue
less
Resource Cost
Equals
Cash in hand
a. To put all the slow and medium moving products on sale by reducing the cost by 50% and employing two temp telesales ladies to sell these to customers. They will also be responsible for making appointments for the sales team with these customers for sales on the fast moving and other products.
b. To employ a temp debtors clerk for three months to clear the outstanding debtors which is currently R 314 258.00
Use the templates below to calculate your resource costs and return on investment.
Resources
Costs
Recruitment fees
Salary
Desk and chairs
Telephones
PC's
Training
Costs of calls estimated over months
Total estimated cost
Potential Revenue
less
Resource Cost
Equals
Cash in hand
Answers
GPT-4o mini
To provide a clear financial plan for both projects at Lovely Locks, we will break down the costs associated with each and calculate the return on investment (ROI) for both initiatives.
### Project A: Sales of Slow and Medium Moving Products
#### Resources and Costs
1. **Recruitment Fees**
- Telesales Ladies: 2
- Estimated Recruitment Fee per Telesales: R1,500
- **Total Recruitment Fees: 2 x R1,500 = R3,000**
2. **Salary**
- Estimated Monthly Salary per Telesales: R10,000
- Duration: 3 months
- **Total Salary Cost: 2 x R10,000 x 3 = R60,000**
3. **Desk and Chairs**
- Estimated Cost per Set: R1,500
- **Total Desk and Chairs Cost: 2 x R1,500 = R3,000**
4. **Telephones**
- Estimated Cost per Telephone: R1,000
- **Total Telephone Cost: 2 x R1,000 = R2,000**
5. **PCs**
- Estimated Cost per PC: R4,000
- **Total PCs Cost: 2 x R4,000 = R8,000**
6. **Training Costs**
- Estimated Training Cost per Telesales: R1,000
- **Total Training Costs: 2 x R1,000 = R2,000**
7. **Costs of Calls Estimated Over 3 Months**
- Estimated Monthly Call Costs: R500
- **Total Call Costs: R500 x 3 = R1,500**
### Total Estimated Cost for Project A
\[
\text{Total Cost} = \text{Recruitment Fees} + \text{Salary} + \text{Desk and Chairs} + \text{Telephones} + \text{PCs} + \text{Training} + \text{Call Costs}
\]
\[
\text{Total Cost} = R3,000 + R60,000 + R3,000 + R2,000 + R8,000 + R2,000 + R1,500 = R79,500
\]
### Potential Revenue
Assume the sale from discounted products generates an estimated revenue of R250,000 in 3 months.
### Resource Cost
\[
\text{Resource Cost} = R79,500
\]
### Cash in Hand
\[
\text{Cash In Hand} = \text{Potential Revenue} - \text{Resource Cost} = R250,000 - R79,500 = R170,500
\]
---
### Project B: Clearing Outstanding Debtors
#### Resources and Costs
1. **Recruitment Fees**
- Debtors Clerk: 1
- Estimated Recruitment Fee: R1,500
- **Total Recruitment Fees: R1,500**
2. **Salary**
- Estimated Monthly Salary: R12,000
- Duration: 3 months
- **Total Salary Cost: R12,000 x 3 = R36,000**
3. **Desk and Chairs**
- Estimated Cost for 1 Set: R1,500
- **Total Desk and Chairs Cost: R1,500**
4. **Telephones**
- Estimated Cost for 1 Telephone: R1,000
- **Total Telephone Cost: R1,000**
5. **PCs**
- Estimated Cost for 1 PC: R4,000
- **Total PC Cost: R4,000**
6. **Training Costs**
- Estimated Training Cost: R1,000
- **Total Training Costs: R1,000**
### Total Estimated Cost for Project B
\[
\text{Total Cost} = \text{Recruitment Fees} + \text{Salary} + \text{Desk and Chairs} + \text{Telephones} + \text{PCs} + \text{Training}
\]
\[
\text{Total Cost} = R1,500 + R36,000 + R1,500 + R1,000 + R4,000 + R1,000 = R45,000
\]
### Potential Revenue
Assume that clearing debtors could potentially recover R350,000 after 3 months.
### Resource Cost
\[
\text{Resource Cost} = R45,000
\]
### Cash in Hand
\[
\text{Cash In Hand} = \text{Potential Recovery} - \text{Resource Cost} = R350,000 - R45,000 = R305,000
\]
---
### Summary of Both Projects
**Project A**
- Total Estimated Cost: R79,500
- Potential Revenue: R250,000
- Cash In Hand: R170,500
**Project B**
- Total Estimated Cost: R45,000
- Potential Recovery: R350,000
- Cash In Hand: R305,000
Both projects are geared towards improving the financial situation and would yield positive returns on investment.
### Project A: Sales of Slow and Medium Moving Products
#### Resources and Costs
1. **Recruitment Fees**
- Telesales Ladies: 2
- Estimated Recruitment Fee per Telesales: R1,500
- **Total Recruitment Fees: 2 x R1,500 = R3,000**
2. **Salary**
- Estimated Monthly Salary per Telesales: R10,000
- Duration: 3 months
- **Total Salary Cost: 2 x R10,000 x 3 = R60,000**
3. **Desk and Chairs**
- Estimated Cost per Set: R1,500
- **Total Desk and Chairs Cost: 2 x R1,500 = R3,000**
4. **Telephones**
- Estimated Cost per Telephone: R1,000
- **Total Telephone Cost: 2 x R1,000 = R2,000**
5. **PCs**
- Estimated Cost per PC: R4,000
- **Total PCs Cost: 2 x R4,000 = R8,000**
6. **Training Costs**
- Estimated Training Cost per Telesales: R1,000
- **Total Training Costs: 2 x R1,000 = R2,000**
7. **Costs of Calls Estimated Over 3 Months**
- Estimated Monthly Call Costs: R500
- **Total Call Costs: R500 x 3 = R1,500**
### Total Estimated Cost for Project A
\[
\text{Total Cost} = \text{Recruitment Fees} + \text{Salary} + \text{Desk and Chairs} + \text{Telephones} + \text{PCs} + \text{Training} + \text{Call Costs}
\]
\[
\text{Total Cost} = R3,000 + R60,000 + R3,000 + R2,000 + R8,000 + R2,000 + R1,500 = R79,500
\]
### Potential Revenue
Assume the sale from discounted products generates an estimated revenue of R250,000 in 3 months.
### Resource Cost
\[
\text{Resource Cost} = R79,500
\]
### Cash in Hand
\[
\text{Cash In Hand} = \text{Potential Revenue} - \text{Resource Cost} = R250,000 - R79,500 = R170,500
\]
---
### Project B: Clearing Outstanding Debtors
#### Resources and Costs
1. **Recruitment Fees**
- Debtors Clerk: 1
- Estimated Recruitment Fee: R1,500
- **Total Recruitment Fees: R1,500**
2. **Salary**
- Estimated Monthly Salary: R12,000
- Duration: 3 months
- **Total Salary Cost: R12,000 x 3 = R36,000**
3. **Desk and Chairs**
- Estimated Cost for 1 Set: R1,500
- **Total Desk and Chairs Cost: R1,500**
4. **Telephones**
- Estimated Cost for 1 Telephone: R1,000
- **Total Telephone Cost: R1,000**
5. **PCs**
- Estimated Cost for 1 PC: R4,000
- **Total PC Cost: R4,000**
6. **Training Costs**
- Estimated Training Cost: R1,000
- **Total Training Costs: R1,000**
### Total Estimated Cost for Project B
\[
\text{Total Cost} = \text{Recruitment Fees} + \text{Salary} + \text{Desk and Chairs} + \text{Telephones} + \text{PCs} + \text{Training}
\]
\[
\text{Total Cost} = R1,500 + R36,000 + R1,500 + R1,000 + R4,000 + R1,000 = R45,000
\]
### Potential Revenue
Assume that clearing debtors could potentially recover R350,000 after 3 months.
### Resource Cost
\[
\text{Resource Cost} = R45,000
\]
### Cash in Hand
\[
\text{Cash In Hand} = \text{Potential Recovery} - \text{Resource Cost} = R350,000 - R45,000 = R305,000
\]
---
### Summary of Both Projects
**Project A**
- Total Estimated Cost: R79,500
- Potential Revenue: R250,000
- Cash In Hand: R170,500
**Project B**
- Total Estimated Cost: R45,000
- Potential Recovery: R350,000
- Cash In Hand: R305,000
Both projects are geared towards improving the financial situation and would yield positive returns on investment.