With a constraining resource, managers should choose the product with the ________.
A) lowest contribution margin per unit of the constraining resource
B) highest sales price
C) highest contribution margin per unit of the constraining resource
D) highest gross profit

Question

Quizplus · Accepted Answer

When a resource is constrained, managers should choose the product with the highest contribution margin per unit of the constrained resource. This is because the contribution margin represents the amount of money a product contributes towards covering fixed costs and generating profit. By choosing the product with the highest contribution margin per unit of the constrained resource, managers can maximize the efficient use of that resource and generate the most profit. Therefore, option C, highest contribution margin per unit of the constraining resource, is the best choice.

With a Constraining Resource, Managers Should Choose the Product with the ________