Caddo Ltd Produces Two Products Using the Same Manufacturing Equipment

Multiple Choice

Caddo Ltd. produces two products using the same manufacturing equipment. Information about the two products is as follows: $$\begin{array} { l r r } & \text { Alpha } & \text { Beta } \\\text { Sales } & £ 15 & £ 35 \\\text { Variable costs } & £ 5 & £ 10 \\\text { Machine hours required } & 0.5 & 2.0 \\\text { Demand (units) } & 30,000 & 10,000 \\\text { Demand (machine hours) } & 15,000 & 20,000\end{array}$$ If Caddo can produce only one of the products in the next period, which product should be produced?

A) Alpha should be produced because it requires less machine hours.
B) Beta should be produced because it generates more revenue.
C) Beta should be produced because it generates more contribution margin per unit.
D) none of the above