When multiple products share a constrained resource,the constrained resource should be allocated first to the product with
A)The lowest contribution margin.
B)The lowest contribution margin per unit.
C)The highest contribution margin per constrained resource.
D)The highest contribution margin.

Question

Quizplus · Accepted Answer

The best choice is to allocate the constrained resource first to the product with the highest contribution margin per constrained resource. This is because this product generates the highest profit margin per unit of constrained resource used, making it more profitable to prioritize its production over other products. Allocating the constrained resource based on contribution margin (A and D) or contribution margin per unit (B) may not lead to optimal profitability.

When Multiple Products Share a Constrained Resource,the Constrained Resource Should