Question: A firm has 3 products that it currently offers for sale. Product 1 sells for $22/unit and has a variable cost of $10/unit. Product 2 sells for $10/unit with variable cost of $4/unit. Product 3 sells for $3/unit with variable costs of $2/unit. Fixed costs are $120,000 for Product 1, $60,000 for Product 2 and $30,000 for Product 3. The expected volume for each product is as follows: Product 1 - 20,000; Product 2 - 35,000; Product 3 - 50,000.
Which product is more profitable? By how much?