Ernest & Company seeks to improve its competitive pricing position by increased output from the existing plant. The actuals for the year are as follows: Total Sales Value. Rs. 12,00,000 Variable Cost Rs. 7,80,000 Fixed Cost Rs 2,40,000 Capital Employed Rs 6,00,000. The proposal is to reduce the selling price by 10 percent order to achieve 20 percent increase in output. No changes in fixed cost is anticipated. Cost reduction is estimated to amount to Rs 80,000. State briefly whether you favour or reject the proposal. Justify your necessary calculations.