If the limiting factor is demand,the most profitable product is the one with the highest contribution margin per unit.

Question

Quizplus · Accepted Answer

This is true because when demand is the limiting factor, a company should focus on selling the products that generate the highest profit per unit sold. This will maximize the company's profitability and help it meet its demand without incurring additional costs. The contribution margin is a useful metric to determine which products are the most profitable because it shows the difference between the price of the product and the variable costs that are required to produce it. Therefore, the product with the highest contribution margin per unit is the most profitable when demand is the limiting factor.

If the Limiting Factor Is Demand,the Most Profitable Product Is