SW Limited manufactures Lenin bed covers. The present cost data are as below: Variable Cost of manufacturing per unit :200 Variable cost of selling…

SW Limited manufactures Lenin bed covers. The present cost data are as below: Variable Cost of manufacturing per unit :200 Variable cost of selling and distribution per unit :100 Fixed costs :16,00,000 Selling price per unit :800 Expected Profit for the coming year :8,00,000 The management could sense a stage of stagnation/deterioration in future sales with the new entrant RK Enterprises. The SW limited has approached to one marketing consulting firm for the study of cost volume profit analysis. The firm suggested three alternatives to fuel the sales growth by tinkering with the selling price. Alternatives Reduce selling price % Projected increase in sales (units) % (from the sales level that would generate 8,00,000 profit) 1 10.00 15 2 12.50 20 3 15.00 25 Required: Calculate the effect on profits under each alternative and recommend which alternative is most likely to be adopted to get the maximum profit. (6 Marks)