Question

Uestion 5

BROOKLYN LTD has developed a new product and is currently considering the marketing and pricing
policy it should employ for this. Specifically, it is considering whether the sales price should be set at Shs.
15,000 per unit or at the higher level of Shs. 24,000 per unit. Sales volume at these two (2) prices is shown
in the following table:
Sales price Shs. 15,000 per Unit
Forecast Sales volume Probability
20,000
0.1
30,000
0,6
40,000
0.3
Sales price Shs. 24,000 per Unit
Forecast Sales volume Probability
8,000
0.1
16,000
0.3
20,000
0.3
24,000
0.3
​

Answer 1

BROOKLYN LTD

The selling price should be set at Shs. 15,000. At this price, there are more sales in unit and value than at the selling price of Shs. 24,000.

Step-by-step explanation:

a) Data and Calculations:

Shs. 15,000 Probability Expected Sales

Forecasted Sales Volume 20,000 10% 2,000

Forecasted Sales Volume 30,000 60% 18,000

Forecasted Sales Volume 40,000 30% 12,000

Total Expected sales 32,000

Total Sales Value = Shs. 480,000,000 (Shs. 15,000 x 32,000)

Shs. 24,000 Probability Expected Sales

Forecasted Sales Volume 8,000 10% 800

Forecasted Sales Volume 16,000 30% 4,800

Forecasted Sales Volume 20,000 30% 6,000

Forecasted Sales Volume 24,000 30% 7,200

Total Expected sales 18,800

Total Sales Value = Shs. 451,200,000 (Shs. 24,000 x 18,800)