a. The Co. can increase unit sales from 500 to 540 by increasing the monthly advertising budget by Tk. 10,000/-. b. The Co. use higher quality raw materials, thus increasing variable costs per unit by Tk. 10, to generate an increase in unit sales from 500 to 580. c. The Co. (1) cuts its selling price Tk. 20 per unit, (2) increases its advertising budget by Tk. 15,000/-per month, and (3) increases sales from 500 to 650 units per month. d. The Co. (1) pays a Tk. 15 sales commission per unit sold instead of paying salespersons flat salaries that currently total Tk. 6,000/- per month, and (2) increases unit sales from 500 to 575 units. Requirement: What is the profit impact in every situation and which alternative is best for the company's 2021 sales.

a. The Co. can increase unit sales from 500 to 540 by increasing the monthly advertising budget by Tk. 10,000/-. b. The Co. use higher quality raw materials, thus increasing variable costs per unit by Tk. 10, to generate an increase in unit sales from 500 to 580. c. The Co. (1) cuts its selling price Tk. 20 per unit, (2) increases its advertising budget by Tk. 15,000/-per month, and (3) increases sales from 500 to 650 units per month. d. The Co. (1) pays a Tk. 15 sales commission per unit sold instead of paying salespersons flat salaries that currently total Tk. 6,000/- per month, and (2) increases unit sales from 500 to 575 units. Requirement: What is the profit impact in every situation and which alternative is best for the company's 2021 sales.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 16E

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