White Kollars Pvt. Ltd. is a company engaged solely in the manufacture of shirts, which are bought mainly by office goers. Currently, the company…

White Kollars Pvt. Ltd. is a company engaged solely in the manufacture of shirts, which are bought mainly by office goers. Currently, the company sells its products directly to the retailers. In the recent years, sales has steadily declined due to rising competition. The forecast for next year suggests that the current decline in profits is expected to persist. The management believes that a profit of 60,00,000 is necessary to ensure an adequate return on capital. Thus, it asked the marketing director to review the marketing policies. Now, the marketing director submits the following profit and loss account for the last year along with 3 proposals available with him: Particulars (Amount in '000) (₹) (₹) Sales revenue (50,000 shirts at 1,500 each) 75,000 Less: Variable costs- Direct materials 7,500 Direct labour 26,250 Variable factory overheads 4,500 Fixed factory overheads 16,500 54,750 Fixed Administration overhead 10,500 Selling and distribution overhead: Sales commission (2% of sales) 1,500 Delivery costs (variable per unit sold) 3,750 Fixed costs 3,000 8,250 73,500 Profit 1,500 Proposals for upcoming year: (i) 10% reduction in selling price which may increase demand by 40%. (ii) Selling of 25,000 units to eFlip, an online platform selling products directly to consumers, at a particular price. eFlip would transport the shirts from White Kollars Pvt. Ltd. to its own warehouse. Thus, abolishing the delivery costs and sales commission to be paid for each sale by White Kollars Pvt. Ltd. However, if a suitable price is negotiated, White Kollars Pvt. Ltd. would contribute - 45,00,000 annually towards the online order catalogue cost and provide special packaging at 75 per shirt. Remaining units of 25,000 would continue to be sold at 1,500 each as per existing business. (iii) 10% price reduction together with an advertising campaign costing - 22,50,000 which may boost sales by 60%. From the information given above, you are required to FIGURE OUT the following for managerial decision: