Katello and RHSM

Problem: Subscription manager doesn’t allow two VMs to be subscribed on one RHEL entitlement

Expected outcome: 1 RHEL subscription should allow to register two VMs

Foreman and Proxy versions: 2.5.4

Foreman and Proxy plugin versions: Katello 4.1.4

Distribution and version: CentOS 7.9

Other relevant data: We have a majority of Oracle Linux servers that we manage in Foreman and use Katello for content management. Now we got few RHEL systems and would like to use Foreman/Katello as RHSM and leverage Katello’s content lifecycle management. So I followed some guides and created exported a manifest from the RH customer portal and added a subscription with 1 entitlement for RHEL. While importing the manifest into Foreman I disabled Simple Content Access. After creating an activation key , a content view and with repos I was able to subscribe a host (VM). But am not able to subscribe 2nd host to the same subscription. On foreman it shows that I have consumed the 1 entitlement I allocated through subscription allocation. But 1 entitlement should allow 1 Physical host or 2 Virtual Hosts.

Can someone please advise what we are doing wrong