Puzzled Limited would like to increase its sales during the year to 3l May 2018. To do

Question:

Puzzled Limited would like to increase its sales during the year to 3l May 2018. To do so, it has several mutually exclusive options open to it:

● Reduce the selling price per unit by 15 per cent;

●Improve the product resulting in an increase in the variable cost per unit of £1.30;

● Spend £15,000 on an advertising campaign:

●Improve factory efficiency by purchasing more machinery at a fixed extra annual cost of £22,500.

During the year to 31 May 2017, the company sold 20,000 units. The cost details were as follows: 

These cost relationships are expected to hold in 2018. 


Required:

State which option you would recommend and why. 

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Accounting For Non-Accounting Students

ISBN: 9781292128979

9th Edition

Authors: John R. Dyson, Ellie Franklin

Question Posted: