Gce Model Questions Vol1 2021 Commerce Question 35

A retailer sells two smartphone models. Model A sells for \(\text{₦}150{,}000\) with a variable cost of \(\text{₦}110{,}000\) per unit. Model B sells for \(\text{₦}200{,}000\) with a variable cost of \(\text{₦}150{,}000\) per unit. Fixed monthly costs are \(\text{₦}1{,}200{,}000\). In a month the retailer sold 40 units of Model A and 30 units of Model B, earning a profit of \(\text{₦}1{,}900{,}000\). The retailer is considering a 10 % discount on Model A, which is expected to increase its sales volume by 25 % (i.e., to 1.25 times the original quantity). Variable costs remain unchanged. Will the promotion increase the monthly profit? Calculate the new profit (or loss) if the promotion is implemented.