Question:
Vargo makes DVD players and TVs. Machine capacity is limited to 3,600 hours per month.
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DVD Players
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TVs
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Contribution margin per unit
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$200
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$500
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Machine hours required per unit
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0.2
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0.625
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Calculate the contribution margin per unit of limited resource.
If Vargo is able to increase machine capacity from 3,600 hours to 4,200 hours, the additional 600 hours could be used to produce either the DVD players or TVs.