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Allocating constrained resources - Umbrella Co. is considering the introduction of three new products. Per unit sales and cost information are as follows: A B C
Sales price $3.00 $5.00 $16.00Fixed costs $1.20 $3.40 $10.00Labor hours per unit $0.50 $1.00 $3.50 Monthly demand in units 1 .2 hours 0.5 hours 5 hours 500 600 240
Required
Question 1: How many of each product should Umbrella Co. produce and sell to maximize its profit?
How can the concept of a composite unit be used to explain why an unfavorable total sales-mix variance of contribution margin occurs?
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