Cari Tank (CT) produces and sells water tanks for the Regional market. The following are estimates relating to its 2020

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Cari Tank (CT) produces and sells water tanks for the Regional
market.
The following are estimates relating to its 2020 budget:
Selling Price---------------------------------
$1000
Variable cost per Tank---------------------
$500
Fixed annual cost----------------------------
$150000
Nett Profit (After tax)-----------------------
$300000
Income tax rate-------------------------------
25%
The mid-year review of the income
statement revealed that sales were not at the expected level. For
the six months of the year to June 2020, 350 units were sold at the
estimated selling price with variable cost as planned. However, the
net profit projection for 2020 would not be achieved unless
management decisions are made. The following mutually exclusive
alternatives were presented to management:
Required:
Cari Tank (CT) produces and sells water tanks for the Regional
market.
The following are estimates relating to its 2020 budget:
Selling Price---------------------------------
$1000
Variable cost per Tank---------------------
$500
Fixed annual cost----------------------------
$150000
Nett Profit (After tax)-----------------------
$300000
Income tax rate-------------------------------
25%
The mid-year review of the income
statement revealed that sales were not at the expected level. For
the six months of the year to June 2020, 350 units were sold at the
estimated selling price with variable cost as planned. However, the
net profit projection for 2020 would not be achieved unless
management decisions are made. The following mutually exclusive
alternatives were presented to management:
Required: