1. Compute the selling price required to meet Wairimu's target of 700,000 as per approach (4) above

Approach 4 Wairimu Wallace has her own views, considering that the company needs to earn a minimum profit of 700,000 for the year. She wants to focus on cutting costs and has identified some measures to reduce direct materials costs by 10%. Her view is if advertising expenditure is increased by 360,000, then sales will also increase by 10%. She estimates that fixed manufacturing overheads would have to rise by 25,000. Also, she considers that administration overheads will need to rise by 17,000. She wants to know the selling price required to achieve that profit outcome