A company is supplying its products to the ultimate consumers through the wholesalers to retailers. The managing director thinks that if they sell through retailers or to the consumer direct, they can increase their sales, earn better prices and make profi t. 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:

Cost of Production:
Variable cost @ Rs. 8 per unit Fixed cost Rs. 6,00,000 In selecting the channels of distribution what factors besides cost would you consider?

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Channels of distribution Sales price per unit (Rs.) Estimated sales per year (Numbers) Selling and distribution cost per unit (Rs.) I To consumer direct 29 60,000 6 || To retailer direct 27 57,000 3 III To wholesaler 24.50 55,000 1.50