Indah Metal Enterprise has been in the steel and spraying business in Kuching for the last twenty years. It began with buying low grade scrapped iron, which is subsequently reshaped and fabricated to produce extremely light and safe carbonized steel tray for the hospitals in proximity. The steel tray isl very popular among the government and private hospitals, especially during certain months of the year, the hospital may experience sudden need for extra steel trays for the hospitalized patients. It was also observed that the demand for the same supplies from areas outside Kuching has also gone up and the company has been asked to increase the supply of steel trays to other hospitals outside Kuching. The private hospitals from other regions have started to order the light steel tray from this company, but with slight modification. A new factory for expansion is proposed, while a study has been conducted to decide on the new cost and revenue structure. The company manufactures and sells three categories of carbonized steel tray with the following selling prices and variable costs. The steel tray is tailored-made to the size that has been designed from each hospital, but limited to three different sizes only, which are categorized into three product lines such as small, medium and large carbonized steel tray. Large Medium Small (RM) (RM) (RM) Selling Price 10.20 8.80 6.50 Variable lCost per unit 7.40 6.60 4.40 Managing cost is an essential process in this industry with rising cost of raw materials and skilled labor force. Aggressive sales strategy is also being adopted by indulging in promotion and advertisement. The company is weighing on the option whether to go ahead with advertisement and promotion. Savings from not spending on promotion and advertising may not be a good idea, if in the long run it does not bring about incremental profit. In the light of the above, the company has decided to take strategic exercise by promoting one product line as it offers relatively higher contributions per unit to the company.The company is considering expenditure on advertising and promotion of large carbonized steel tray. It is hoped that such expenditure, together with a reduction in the selling price of the product, would increase sales. Existing annual sales volume of the three products is: Large steel trayr 450,000 units Medium steel tray 520,000 units Small steel trayr 700,000 units If RIHIBUOO per annum was to be invested in advertising and sales promotion, sales of large steel tray at reduced selling price, would be expected to be: Option 1, with 500,000 units at RMQBU per unit; OR, Option 2, with 800,000 million units at EMBED per unit. The variable cost is expected not to change in the short term, and there is no limitation on the number of units sold. Annual fixed costs are currently at RM2.0 million per annum