Additional information
It another factory the company manutadures bookcases. The following infomation is available.
Selling price per unit $
Materials per unit $
Dired labour per unit $
Fixed costs per month $
Factory capacity per m onth units
Recently demand for the product has fallen due to increased competition and the target pro fit of
$ per m onth has not been met.
The directors are considering the following options.
Option A:
Reduce the selling price of each bookcase by $ per unit.
Introduce a sales commission of of the selling price.
It is expeded that demand will be units.
Option B:
Change the design to im prove quality resulting in an increase of in the material cost per
unit.
Labour hours per unit will increase by
The revised selling price of each bookcase will be $
Start an advertising campaign at a cost of $ per annum.
It is expeded that demand will be units.
RE QUIRED
e Calculate the forecast pro fit per month for:
i Option A marks
ii Option marks
f Recomm end which option the diredors should choose. Justify your ansmer. marks
