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The following suggestions are under consideration:
(a) 10% reduction in price to yield an increase
in sales volume from 6600
to 7400 units.
Current unit price Rs. 1,000
Unit variable cost Rs. 500
Fixed cost Rs. 30,00,000
Prepare a statement comparing gross revenue, profit,
contribution and P/V ratio of the two alternatives with
present results. Which suggestion would you recommend?
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Answer Posted / tgr
The price is reduced by 10% but V.cost remains the same.hence it will be first one which is suitable
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