IBM Corporation offers software solutions to businesses worldwide. The company's management conducted a contribution margin...
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IBM Corporation offers software solutions to businesses worldwide. The company's management conducted a contribution margin analysis to assess the profitability of its software products. The analysis includes estimates of variable costs, fixed costs, selling price per unit, and projected sales volume for each software product. The data for Product A, Product B, and Product C are as follows:
Product A:
Variable Cost per Unit: $50
Fixed Costs: $500,000
Selling Price per Unit: $100
Projected Sales Volume: 10,000 units
Product B:
Variable Cost per Unit: $40
Fixed Costs: $400,000
Selling Price per Unit: $80
Projected Sales Volume: 15,000 units
Product C:
Variable Cost per Unit: $60
Fixed Costs: $600,000
Selling Price per Unit: $120
Projected Sales Volume: 8,000 units
Conduct a comprehensive contribution margin analysis for each software product and recommend strategic pricing and marketing strategies to maximize profitability.
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