A manufacturer incurred the following costs in a period for his sole product:

A normal period’s sales are 500 units at £70 each, but up to 650 units could be made in a period. Various alternatives are being considered:
i. Reduce the price to £63 each and sell all that could be made.
ii. Increase the price to £80 each at which price sales would be 400 units.
iii. Keep the present plan.
What is the most profitable plan? What are the C/S ratios? What is the break-even point for each alternative?

Transcribed Image Text:

Labour (25% Variable) 8,000 Materials (100% Variable) 12,000 Selling Costs (10% Variable) 2,000 Other Costs (Fixed) 7,000 Total Costs 29,000