QUESTION 3 (10 marks)

Plastique Pty Ltd sells only one type of plastic container for multi-purpose packaging. Data relating to the product for 2019 are as follows:

Number of Units sold	45 000
Selling Price per unit	$26
Variable Manufacturing Cost per unit	$8
Variable Selling Cost per unit	$4.50
Annual Fixed Non-Manufacturing Cost	$80 000
Annual Fixed Manufacturing Cost	$265 600

The CEO of Plastique currently is under pressure from the shareholders to increase profits to

$432 000 in 2020.

5. If annual fixed costs manufacturing costs increased by $60,000 and the company can choose to increase the price by 10% or decrease variable manufacturing cost per unit by 25% to compensate the decrease in profits. Which decision would maximise the profit of the company? Assume the number of units sold are 45 000.