1 Anu Company-Solving for unknowns Anu Company produces chocolate almond bars. Each bar sells for 4. The variable costs for each bar (sugar. chocolate, almonds, wrapper, labour, and so on) amount to 2.50. The total fixed costs are 26,00,000 During the most recent year, one million bars were sold. The president of Anu company, not fully satisfied with the profit performance of the chocolate bar, was considering the following options to increase the bar's profitability: increase advertising increase the quality of ingredients, increase the selling price, combinations of the three (a) The sales manager is confident that an advertising campaign could double the sales volume. If the company president's goal is to increase this year's profits by 50% over last year's what is the maximum amount that can be spent on advertising (b) Assume that the company increases the quality of its ingredients, thus increasing variable costo 23 Aniwer the following questions 0 How much must the welling price be increased to maintain the same break-even point? (W) What will the new price be if the company wants to increase the old contribution margin ratio by 50%? (c) The company has decided to increase los selling price to BS. The sales volume drops from 10 lakh to 8,00,000 bars. Was the decision to increase the price a good one? Compute the sales volume that would be needed at the new price for the company to earn the same profit as last year d) "The la manager is convinced that lay increasing the quality of the ingredients (increasing variable me to 33) and by advertising the increased paly (advertising experies would be increased by 210,00.000), al volume could be doubled. The ales manager lus also indicated that a price increase would not affect the ability to double the sales volume s long as the price increase is not one than 20% of che current ling price Compute the selling price chat we need to achieve the lof increasing pro by 50% is the les managers plan feasible? Wordpre nould you choose Why 9159/2003