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Betty DeRose, Inc. produces and sells three products. Information about these products for 2022, the most recent year, appears below: Product A Product B Product
Betty DeRose, Inc. produces and sells three products. Information about these products for 2022, the most recent year, appears below: Product A Product B Product C selling price per unit $33 $49 $24 variable costs per unit $14 $37 $11 number of units sold 22,000 18,000 25,000 Betty DeRose, Inc. reported total fixed costs of $195,636 in 2022. Assume the company made the following changes in 2023: 1. increased the advertising of Product A by $238,759. 2. increased the quality of the components of Product A thus its variable cost per unit increased to $16. 3. increased the selling price of Product A. These changes resulted in the sales volume of Product A doubling. However, this also resulted in some customers currently buying Product B to start buying Product A instead. Thus, the sales of Product B decreased by 15%. Assume the sales of Product C were unchanged. Calculate the selling price per unit of Product A that is needed if Betty DeRose wants to increase the net income for 2023 by 25% over the net income from 2022 . Hint - given the changes made in 2023 the sales mix ratio from 2022 is no longer valid. Do not try and use last years sales mix ratio to solve this problem.
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