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ABC Company is currently ahving 1000 Suits at a price of Rs. 500/- per suit total cost is Rs. 4,50,000 representing fixed cost. Your average variable...
ABC Company is currently ahving 1000 Suits at a price of Rs. 500/- per suit total cost is Rs. 4,50,000 representing fixed cost. Your average variable cost is constant. The company aims at achieving maximum profit. The marketing manager of the company believes that if the comapny could reduce the price to Rs.200 per and raise the sales by icnrease 20%. In contrast the consultant of the company argues taht a 20% reduction in current price would bring 60% increase in sale.A) If you were the MD of ABC company abd if you totally satsified by the demand estimates by the Marketing manager, would you reduce the price to Rs. 400/- If so why?B) If instead of agreeing with demand estimates the marketing manager, you agree with that of the consultant other things remaining the same above. Would you entertain price reduction if so why?
