$,1\mathrm{.}50\mathrm{.}00025\%30\%35\%20\%-1064$

According to the sales department of your 'Company, the sales of the Company's product is slacking and the budgeted sales of $1,50,000$ units per year can only be met if the trade discount is raised from $25$ percent to $30$ percent. If the discount is raised to $35$ percent, the sales will increase by $20$ percent over the budget for which the production capacity exists. Indicate which of the two alternatives is more profitable. The retail price of the product is $10$ each. The cost of production is $6$ of which $4$ is variable.

Ans. Profit $1,50,000$ at $30\%$ discount

$1,50,000$ at $35\%$ discount.