In product-mix decisions,managers should ________.
A) always focus on maximizing total contribution margin
B) only focus on the product with the greatest contribution margin per machine-hour
C) only focus on the full costs of the product
D) always focus on maximizing the selling price of the product

Question

Quizplus · Accepted Answer

Maximizing total contribution margin ensures that the company is generating the most profit overall. Focusing only on the product with the greatest contribution margin per machine-hour or only on the full costs of the product may lead to suboptimal decisions that do not consider the overall profitability of the product mix. Maximizing the selling price of the product alone may not be sustainable in the long-term and may not take into account the demand for the product.

In Product-Mix Decisions,managers Should ________