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A firm sells three products: Product 1: $15 sales price per unit; $9 variable cost per unit. Product 2: $11 sales price per unit; $8
A firm sells three products:
Product 1: $15 sales price per unit; $9 variable cost per unit. Product 2: $11 sales price per unit; $8 variable cost per unit. Product 3: $22 sales price per unit; $17 variable cost per unit.
In a typical year, 25% of sales units are Product 1, while 25% of sales units Product 2, and 50% of sales units are Product 3.
What is the firm's composite unit CM (just contribution margin for one composite unit)?
Simplify the sales mix so there is one unit of Product 1 per composite unit.
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