When a firm has limited direct labor hours,it should prioritize the product with:
A)the highest selling price per unit.
B)the highest contribution margin per unit.
C)the highest contribution margin per direct labor hour.
D)the lowest direct labor hours per unit.

Question

Quizplus · Accepted Answer

Prioritizing the product with the highest contribution margin per direct labor hour will ensure that the firm is maximizing its profitability with the limited labor hours available. This approach considers both the profit margin and the efficient use of resources. Options A and B only consider one aspect of profitability and do not take into account the constraints on labor hours. Option D does not consider profitability at all.

When a Firm Has Limited Direct Labor Hours,it Should Prioritize