A company is supplying its products to the ultimate consumers through the wholesalers to retailers. The Managing Director thinks that if they sell through the retailers or to the consumers direct, they can increase their sales, earn better prices, and make more profit. As a cost accountant of the company, you are required to advise the Managing Director in selecting the channels of distribution from the following information: 

Transcribed Image Text:

Channels of distribution Sale price per unit (Rs.) Estimated sales per year (Nos.) 1 To consumer direct 9.50 6,00,000 2 To retailer direct 8.50 5,70,000 1.60 Selling and distribution cost per unit (Rs.) Cost of product: Variable cost @ Rs. 4 per unit Fixed cost Rs. 5,00,000 In selecting the channels of distribution, what factor besides cost would you consider? 3 3 To wholesaler 7.25 5,40,000 0.90