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A Company produces and sells four products. Information about these products for August is given below: Product #1 Product #2 selling price per unit $63
A Company produces and sells four products. Information about these products for August is given below: Product #1 Product #2 selling price per unit $63 $81 variable costs per unit $29 $42 number of units sold 3,300 4,100 Product #3 Product #4 selling price per unit $62 $71 variable costs per unit $34 $42 number of units sold 3,600 5,100 The fixed costs for August amounted to $320,120. In order to improve profitability, The Company made the following changes in September: 1. Adjusted the selling price of Product #2. 2. Automated a portion of the production process related to Product #2. This reduced the variable costs of Product #2 by $3 per unit. 3. Increased the advertising for Product #2 by $275,037. These changes resulted in the number of units of Product #2 that were sold doubling. However, these changes also resulted in the sales of Product #1 decreasing by 25% as some customers started buying Product #2 instead of Product #1. Assume the sales of Product #3 and Product #4 were not impacted by these changes. Calculate the selling price per unit for Product #2 needed in September in order for the September net income to be 20% larger than the August net income.
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