For short-run product-mix decisions, maximizing contribution margin will also result in maximizing operating income.

Question

Quizplus · Accepted Answer

Maximizing contribution margin means focusing on the products that contribute the most towards covering fixed costs and generating profit in the short run. Since operating income is calculated by subtracting total fixed costs from total revenue, maximizing contribution margin will result in covering more fixed costs and generating more operating income. Therefore, the statement is true.

For Short-Run Product-Mix Decisions, Maximizing Contribution Margin Will Also Result