6. A company manufactures a single product with a capacity of 120000 units per annum. The summanzed profitability stateinent for a year is as under (Note: Direct Labour changes with production) Amount RA. Particulars Sales: 100 000 units R15 per un LAKTOOSITOS Amount R. LUDO Direct materials 2. KOKO - Direct later 2.000 Proxchicken overlads - variable Production overheads - fixed DO 300,000 1,000 - Administrative overtunads- wed Selling and distribution owlads - vanable 90,000 1. OKO - Selling and distribution ovxxlwade fixed Toutcase of sales Profit 12 COCK 2OTOKOKO per unit You are required to evaluate the following options: a) What will be the amount of sales required to earn a target profit of 30% on sales, if the packing is improved at a cost of Re 1 b) There is an offer from a large retailer for purchasing 30000 units per annum subject to providing a packing with a different brand name at a cost of Rs.2 per unit However, in this case there will be no selling and distribution expenses. Also this will not in any way affect the company's existing business. What will be the break-even price for this additional offer? c) If an expenditure of Rs.3.00.000 is made on advertising, the sales would increase from the present level of 100000 units to 120000 units at a price of Rs.18 per unit Will that expenditure be justified? d) If the selling price is reduced by Rs.2 per unit there will be 100% capacity utilization Will the reduction in selling price be justified