In a multi-product environment:

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In a multi-product environment, it is more appropriate to use a weighted-average contribution margin per unit for all products produced and sold. This approach takes into account the relative contribution margins of each product and helps in making decisions about which products to produce or sell. Simply focusing on the product with the highest contribution margin or sales price per unit may not necessarily maximize overall profitability. Cost-volume-profit analysis can still be useful, but it needs to be applied to the entire product mix rather than individual products.

In a Multi-Product Environment