Bradley's Department Store can sell either products A or B. The following information was gathered: $$\begin{array} { l l l }
& \underline { \mathrm { A } } & \underline { \mathrm { B } } \
\text { Retail price per unit } & \$ 54.00 & \$ 33.00 \
\text { Cost of merchandise } & 43.00 & 27.00
\end{array}$$ If Bradley's Department Store can sell either 8,000 units of A or 18,000 units of B at full capacity, it should sell:

Question

Bradley's Department Store can sell either products A or B. The following information was gathered: $$\begin{array} { l l l } 
& \underline { \mathrm { A } } & \underline { \mathrm { B } } \
\text { Retail price per unit } & \$ 54.00 & \$ 33.00 \
\text { Cost of merchandise } & 43.00 & 27.00
\end{array}$$ If Bradley's Department Store can sell either 8,000 units of A or 18,000 units of B at full capacity, it should sell:

Quizplus · Accepted Answer

The contribution margin per unit for A is $11 ($54 - $43), and for B is $6 ($33 - $27). However, the total contribution margin for A is $88,000 (8,000 units x $11), and for B is $108,000 (18,000 units x $6). Therefore, selling product B results in a higher total contribution margin.

Bradley's Department Store Can Sell Either Products a or B