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Carter Inc. produces two products, A and B. The pertinent per-unit data follow: B Sales Price $ 268 $ 225 Costs: Direct Materials 80 Direct
Carter Inc. produces two products, A and B. The pertinent per-unit data follow: B Sales Price $ 268 $ 225 Costs: Direct Materials 80 Direct labor 43 Variable factory overhead (based on DLHs) 60 Fixed factory overhead (based on DLHs) 30 4842 40 80 40 20 Marketing expenses (all variable) 40 31 253 211 $ 15 $ 14 Total Costs Operating Income There is insufficient labor capacity in the plant to meet the combined demand for both products. Both products are produced through the same production departments. The fixed factory overhead rate is $10 per DLH. Assume that there are no avoidable fixed factory overhead costs. Required: 1. Calculate the relevant unit contribution margin for each of the two products. 2. Determine which product should be produced in priority, given the labor constraint and explain why
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