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Mganga Makini Traders sells product branded Tunzo. The following information relates to the product: Annual sales 600,000 units Selling price per unit Sh.160 Variable cost

  1. Mganga Makini Traders sells product branded Tunzo. The following information relates to the product:

Annual sales 600,000 units

Selling price per unit Sh.160

Variable cost per unit Sh.96

Annual fixed cost Sh.8,640,000

The management is considering launching a sales promotion in the coming year which is expected to have the following impact:

  1. Sales will increase by 300,000 units
  2. Advertising and promotion cost will amount to Sh.480,000

Required:

  1. The current breakeven point in units and shillings
  2. Advise the management whether to undertake the sales promotion

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