A company currently sells 10,000 units of its product at a price of 20, with a variable cost of 12 and a fixed cost of 50,000. The director is considering several alternative options. Option One: Cut the price to 18 and perhaps sell 15,000 units. Option Two: Cut the price to 14, reduce material costs by 3, and cut advertising by 10,000. Anticipated volume for this option is 10,000 units. Option Three: Increase the price to 30, improve the quality by increasing variable cost by 8 and increase advertisement by 10,000. The expected sales for this option is 20,000. Option Four: Cut the price to 19 and include a 10 mail-in rebate offer. It is anticipated that 15,000 units could be sold and only 20 percent of the rebate coupons would be redeemed. The best option is to

Select one:

a. The Current Situation

b. Option One

c. Option Two

d. Option Three

e. Option Four