Decide whether these proposals should be pursued and justify your decision.

• Sales revenue = $100,000 \text{ units} \times \text{GH¢}8/\text{unit} = \text{GH¢}800,000$
• Total Variable Costs = Material + Labour = $\text{GH¢}300,000 + \text{GH¢}200,000 = \text{GH¢}500,000$
• Contribution = Sales Revenue - Total Variable Costs = $\text{GH¢}800,000 - \text{GH¢}500,000 = \text{GH¢}300,000$
• Fixed Costs = $\text{GH¢}150,000$
• Current Net Profit = Contribution - Fixed Costs = $\text{GH¢}300,000 - \text{GH¢}150,000 = \text{GH¢}150,000$

• New sales volume = $150,000 \text{ units}$

• New selling price = $\text{GH¢}7/\text{unit}$

• New advertising cost (fixed) = $\text{GH¢}14,000$

• New Sales Revenue = $150,000 \text{ units} \times \text{GH¢}7/\text{unit} = \text{GH¢}1,050,000$

• Current Variable Cost per unit = $\text{GH¢}500,000 / 100,000 \text{ units} = \text{GH¢}5/\text{unit}$

• New Total Variable Costs = $150,000 \text{ units} \times \text{GH¢}5/\text{unit} = \text{GH¢}750,000$

• New Contribution = $\text{GH¢}1,050,000 - \text{GH¢}750,000 = \text{GH¢}300,000$

• New Total Fixed Costs = Original Fixed Costs + Advertising Cost = $\text{GH¢}150,000 + \text{GH¢}14,000 = \text{GH¢}164,000$

• Net Profit (Proposal a) = New Contribution - New Total Fixed Costs = $\text{GH¢}300,000 - \text{GH¢}164,000 = \text{GH¢}136,000$

• Sales volume and selling price remain unchanged.

• Material costs reduce by 20%.

• Fixed costs increase by $\text{GH¢}72,000$.

• Sales Revenue = $\text{GH¢}800,000$ (unchanged)

• Current Material Cost per unit = $\text{GH¢}300,000 / 100,000 \text{ units} = \text{GH¢}3/\text{unit}$

• New Material Cost per unit = $\text{GH¢}3 \times (1 - 0.20) = \text{GH¢}3 \times 0.80 = \text{GH¢}2.40/\text{unit}$

• New Total Material Cost = $100,000 \text{ units} \times \text{GH¢}2.40/\text{unit} = \text{GH¢}240,000$

• Labour Cost = $\text{GH¢}200,000$ (unchanged)

• New Total Variable Costs = $\text{GH¢}240,000 + \text{GH¢}200,000 = \text{GH¢}440,000$

• New Contribution = Sales Revenue - New Total Variable Costs = $\text{GH¢}800,000 - \text{GH¢}440,000 = \text{GH¢}360,000$

• New Total Fixed Costs = Original Fixed Costs + Increase in Fixed Costs = $\text{GH¢}150,000 + \text{GH¢}72,000 = \text{GH¢}222,000$

• Net Profit (Proposal b) = New Contribution - New Total Fixed Costs = $\text{GH¢}360,000 - \text{GH¢}222,000 = \text{GH¢}138,000$

• Current Net Profit: $\text{GH¢}150,000$
• Net Profit (Proposal a): $\text{GH¢}136,000$
• Net Profit (Proposal b): $\text{GH¢}138,000$

Both proposals result in a lower net profit than the current forecast. Therefore, neither proposal should be pursued.

The final answer is $\boxed{\text{Neither Proposal a) nor Proposal b) should be pursued, as both result in a lower net profit compared to the current forecast of GH¢150,000. Proposal a) yields GH¢136,000 and Proposal b) yields GH¢138,000.}}$