ABC Ltd manufactures and sells sole products for Rs. 50 per unit and has a variable cost per unit of Rs. 20. The accounts of the company for the year 2009 are expected to reveal a profit of Rs. 7,00,000 after charging fixed costs of Rs. 5,00,000.
Market-sensitivity tests suggest the following responses to price charges:
| Alternatives | Selling price reduced by | Quantity sold increased by |
| A | 5% | 10% |
| B | 7% | 20% |
| C | 10% | 25% |
Evaluate these alternatives and state which alternative, on to be profitability consideration, should be adopted for the forthcoming year, assuming the cost structure to be unchanged from 2009.
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