Muscat Cement Factory gives you the following data related to their current manufacturing activities;

Plant Capacity

4,00,000 units p.a.

Present utilisation

40%

Actuals for the year 2019:

Selling Price

OMR. 50.000 per unit

Materials Cost

OMR. 20.000 per unit

Variable Manufacturing Cost

OMR .15.000 per unit

Fixed Cost

OMR. 2,700,000

The company is planning to improve its plant capacity utilization. The following proposals are under consideration.

a) Reducing selling price by 10%.

b) Spend additional OMR 300,000 on sales promotion among industrial construction clients

Tasks: Analyse the above proposals and decide how many units should be made and sold in order to earn a profit of OMR. 500,000 per year? Present your decision in the form of a report addressing to the Finance Director of the Company with the reason for choosing such a decision.