Assume a company produces three products: A,B,and C.It can only sell up to 3,000 units of each product.Production capacity is unlimited.The company should produce the product (or products)that has (have)the highest
A)contribution margin per hour of machine time.
B)gross margin per unit.
C)contribution margin per unit.
D)sales price per unit.

Question

Quizplus · Accepted Answer

To maximize profits, the company should produce the product(s) with the highest contribution margin per unit. This means that for every unit sold, the company will have more money left over to cover its fixed costs and generate profits. Since the production capacity is unlimited, the company should produce as many units as possible of the product(s) with the highest contribution margin per unit. Therefore, the best choice is to produce the product(s) that has (have) the highest contribution margin per unit, which is option C.

Assume a Company Produces Three Products: A,B,and C