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Inc. sells three products. Income statement information for the three products for the most recent year is given below: Selling price per unit .....
Inc. sells three products. Income statement information for the three products for the most recent year is given below: Selling price per unit ..... Product A $20 Product B $18 Product C $25 Costs: Variable costs $128,000 $43,200 $137,500 Advertising $ 17,500 $11,500 $ 22,400 Rent..... $ 13,800 $13,800 $ 13,800 Supervisor's salary. $ 24,300 $22,100 $ 26,600 Property taxes $ 3,000 $ 4,000 $ 7,000 Units sold.. 8,000 6,000 11,000 The rent is allocated to the three products equally and the property taxes are allocated based on the square footage each product uses in the factory. Inc. is considering eliminating Product A. If Product A is eliminated, the space currently being used to produce Product A can be rented out for $14,300 per year. Calculate the number of units of Product A that would need to be sold next year in order for s Inc. to be economically indifferent between dropping and keeping Product A.
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