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A company is preparing the sales budget for two potential products. Both products require the use of the same manufacturing equipment, which is only available
A company is preparing the sales budget for two potential products. Both products require the use of the same manufacturing equipment, which is only available for 60 hours each month. The contribution margin of Product A is $95 per unit, and the contribution margin of Product B is $55 per unit. Product A requires 4 hours of machine time per unit, and Product B requires 2.5 hours per unit. In order to efficiently allocate the equipment resources, the company should manufacture A. Product A because the contribution margin is more per unit than Product B. B. Product B because they can produce more units of that product than Product A. C. Product A because it will make better use of the equipment than Product B D. Product B because they can produce many units and still save hours for Product A
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