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Zelda, a profit-maximizing company, manufactures and sells three products with the following selling prices and variable costs: Product A Product B Product C (in EUR
Zelda, a profit-maximizing company, manufactures and sells three products with the following selling prices and variable costs: Product A Product B Product C (in EUR per unit} (in EUR per unit) (in EUR per unit} Variable costs 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. Current and planned annual sales volumes for the three products are: . Product A: 450,000 units it Product B: 1,000,000 units it Product C: 380,000 units If 60,000 EUR per annum was to be invested in advertising and sales promotion, sales of Product A at reduced selling prices would be expected to be: . 590,000 units at a price of 2.?5 EUR per unit OR * 650,000 units at a price of 2.55 EUR per unit. Annual xed costs are currently 1,710,000 EUR per annum. Zelda's CFO already came up with some alternative ideas on the advertising campaign. Nonetheless he needs your assistance in making the right decisions
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