To maximize profits, managers should produce more of the product with the greatest contribution margin per unit of the constraining resource.

Question

Quizplus · Accepted Answer

Maximizing profits is all about making the most profit with the available resources. The contribution margin per unit of the constraining resource shows the profit earned by producing one more unit of the product limited by the scarce resource. By producing more of the product with the highest contribution margin per constraining resource, managers can increase profits while making the most efficient use of the limited resources.

To Maximize Profits, Managers Should Produce More of the Product