YVenus Lighting is an exclusive manufacturer of sensor desk lamps. In 2021, the firm sold 210,000 units

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YVenus Lighting is an exclusive manufacturer of sensor desk lamps. In 2021, the firm sold 210,000 units of its basic sensor desk lamps at a market price of Rs 3000. For 2022, the firm anticipates a sales volume of 230,000 due to an increased demand in the market. Aditi Reddy, the vice-president-marketing recommended lowering the prices of the basic model of sensor desk lamps further in 2022 to boost the volume of sales. She had data showing that 290,000 units could probably be sold at Rs 2600 and 330,000 units could be sold at Rs 2400. It is expected that this action would result in an increased share of the market for Venus. Ramit Verma, vice-president-production, opposed Aditi's price cutting suggestion and focused
on an entirely different way of improving profits. Ramit's plan was to offer a bonus @ 6% of sales to distributers to incentivize them to sell more. Additionally, by automating several
manufacturing processes, there could be a reduction in the variable costs of the basic lamps from Rs 2200 to Rs 2000 per unit. Ramit emphasized that this decrease in variable cost would be offset by a rise in fixed production expenses and depreciation amounting to Rs 60 lakhs annually.Though these improvements would require an investment of approximately Rs 300 lakhs but
would be worthwhile for various production related reasons.
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REQUIRED:
A. Which selling price would yield the highest contribution in 2022?

B. How would the acquisition of new machinery in 2022 impact the firm's profit over last year?
C. Which alternative would you recommend? Why?
D. At what level of sales volume will the additional fixed cost arising out of Ramit's proposal be justified?
E. Are there any other factors that should be considered before taking a final call?