ABC Ltd manufactures and sells sole products for Rs. 50 per unit and has a variable cost per unit of Rs. 20. The accounts of the company for the year 2009 are expected to reveal a profi t of Rs. 7,00,000 after charging fi xed costs of Rs. 5,00,000.

Market-sensitivity tests suggest the following responses to price charges:

Evaluate these alternatives and state which alternative, on to be profi tability consideration, should be adopted for the forthcoming year, assuming the cost structure to be unchanged from 2009.

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Alternatives Selling price reduced by Quantity sold increased by A 5% 10% B 7% C 10% 20% 25%