unit 6 dec 2008 exam help

For sales of 5000 miles they receive revenue of £2,500(ignoring the £000 for simplicity). This means they charge £0.5 per mile.
Now the question says for every mile over 5,000 they will give 10% discount. This means they will charge £0.45(90% of 0.5) per mile for the miles above 5,000.

Therefore for 6,000 there are 1,000(6,000-5,000) miles to charge at lower price. Therefore extra miles revenue = 1,000x0.45 = £450. Add this to the cost of the first 5,000 miles(£2,500 = 5,000x£0.5) & you get 2,500 + 450 = £2,950

Now the extra sales revenue for 7,000 = (7,000-5,000)x0.45 = £900. Add this to the cost of the first 5,000 miles & you get 2,500 + 900 = £3,400

There are shortcuts you can take, but if you are confused, best to stick to the long way.