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Harzog Industries produces three products, as shown below. A B C Sales price $75 $130 $30 Variable cost per unit 40 90 15 Contribution margin

Harzog Industries produces three products, as shown below.

A

B

C

Sales price

$75

$130

$30

Variable cost per unit

40

90

15

Contribution margin

$35

$ 40

$15

Laminating hours per unit

5

10

2

Monthly demand (units)

30,000

15,000

10,000

Because of a recent fire that destroyed a small section of the factory, Harzog has only 250,000 laminating hours available for the coming month's production schedule.

Assume that Harzog has obtained a new piece of equipment that will be used only in the production of product B. This new equipment will increase the variable cost per unit to $100, but it will reduce reduce the number of laminating hours required for product B down to 3 hours. The new equipment will not affect the total number of laminating hours available. How does the acquisition of this new equipment affect Harzogs planned production? Be specific.

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