A company currently manufactures 9,600 units per month of its only product and sells them at Rs.120 per unit. Recently the company agreed to a union demand for 15% increase in wages. This will come into effect from next month. The details of current cost of production are as follows:

	Cost per unit
Direct Material	50
Direct Labour	20
Variable overheads (100% Direct labour)	20

The company is considering the following two strategies to neutralise the increase in cost with a view to maintaining profit at the current level.

Raise the selling price suitably, but maintain production/sales at the current level. To attract dealers and maintain the sales, increase the sale commission. This will increase the variable selling overheads by Rs.4 per unit.

Suggest a suitable price to maintain the same level of profit. What is the new P/V ratio?