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Answer the following question based on the information given below:

The following table shows the break-up actual costs incurred by a company in last five years [year $2002$ to year $2006]$ to produce a particular product.

The production capacity of the company is $2000$ units. The selling price for the year $2006$ was Rs. $125$ per unit. Some costs change almost in direct proportion to the change in volume of production, while the other do not follow any obvious pattern of change with respect to the volume of production and hence are considered fixed. Using the information provided for the year $2006$ as the basis for projecting the figures for the year $2007$, answer the following questions

 Year 2002 Year 2003 Year 2004 Year 2005 Year 2006 Volume of production 1000 900 1100 1200 1200 Cost(Rs) Material 50,000 45,100 55, 200 59, 900 60, 000 Labour 20,000 18,000 22, 100 24,150 24,000 Consumables 2,000 2,200 1,800 1,600 1,400 Rent of building 1000 1000 1100 1100 1200 Repair and maintenance expenses 800 820 780 790 800 Operating cost of machines 30,000 27,000 33,500 36,020 36,000 Rates and taxes 400 400 400 400 400 Selling and marketing expenses 5,750 5,800 5, 800 5,750 5,800

If the company reduces the price by $5\%,$ it can produce and sell as many units as it desires. How many units the company should produce to maximize its profit?

1. $1400$
2. $1600$
3. $1800$
4. $1900$
5. $2000$

1 vote