Question 3 Glory Ltd manufactures and sells three products with the following selling price and variable cost data. Product A Product B Product C GH/unit GH/unit GH/unit Selling price 3.00 2.45 4.00 Variable cost 1.20 1.67 2.60 The company is considering expenditure on advertising and promotion of product A. 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 are Product A 460,000 units Product B 1,000,000 units Product C 380,000 units 3 If GH 60,000 per annum was to be invested in advertising and sale promotion, sale of product A at reduced selling prices would be expected to be 590,000 units at a selling price of GH 2.75 per unit or 650,000 units at a selling price of GH 2.55 per unit. Annual fixed costs are currently GHS1,710,000 Required: i Calculate the current break-even sales for each of the products, and for the company as whole. ii. Calculate the break-even sales for each of the products, and for the company as whole, when the proposal of investment in advertising and sales promotion and the reduction in the selling price is implemented. iii. Advice the management of the company as to whether the proposal of expenditure on advertising and sale promotion, together with the selling price reduction should be introduced for product A