whether or not to spend money on advertising and reducing the selling price of Product A.

whether or not to spend money on advertising and reducing the selling price of Product A.

please only answering the below question.
Part 2 – Planning (20%)
Oren Ltd manufactures and sells 3 products with the following selling prices and variable costs:
£ per unit Product A Product B Product C
Selling price 3.00 2.45 4.00
Variable cost 1.20 1.67 2.60
Currently, the sales per year is as follows:
Product A 500,000 units 25%
Product B 1,100,000 units 54%
Product C 400,000 units 21%
Management is considering an advertising boost from Product A which, with a reduction in the selling price, will increase sales of Product A. If £60,000 was to be spent on the advertising, sales of Product A (at reduced selling prices) would be expected to be:
700,000 units at £2.75 per unit
or 750,000 units at £2.55 per unit.
Currently total fixed costs are £1,800,000 per year (all three products).
Required:
(a) Calculate the break-even (in sales revenue).
(b) Advise the management if the expenditure on advertising – together with selling price reduction – should be introduced for Product A.

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