Managerial Accounting Quiz
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RELEVANT COSTS AND SPECIAL DECISIONS
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Sterling Manufacturing faces a bottleneck in its finishing department, which has 480 hours of capacity per month. The company produces two products with the following characteristics: Product A requires 3 finishing hours per unit with $90 contribution margin; Product B requires 8 finishing hours per unit with $180 contribution margin. If Sterling has firm commitments to deliver 80 units of Product A monthly, what production plan maximizes contribution margin for the remaining capacity?
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