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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
- 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:
- Sales will increase by 300,000 units
- Advertising and promotion cost will amount to Sh.480,000
Required:
- The current breakeven point in units and shillings
- Advise the management whether to undertake the sales promotion
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