Accounting

VCR Ltd. manufactures a commercial video recorder. The market research department estimates that the number sold per day varies with price per unit, thus 900 - P 9= 3 Where q = quantity sold per day p=price per unit The variable cost per unit is Rs. 324 and attributable fixed costs are Rs. 1.,000 per day. The sales department thinks that maximum profit coincides with maximum revenue but the Managing Director is not so sure. (a) You are required, as Management Accountant, to analyse the position so as to confirm or refute the sales department's assertion. Increases of Rs. 150 per day in fixed costs and 20% in variable costs are expected, and to allow for these cost increases, a selling price of Rs. 792 per unit is being considered. You are required, assuming that the cost increases do occur, (b) to calculate the profit per day if the selling price is Rs. 792 per unit; (c) to determine whether any other selling price will produce higher profit