In attempting to improve profitability when faced with a bottleneck that is involved in the production of two or more products,which of the following is most important for management to consider?
A)Contribution margin per unit for each product
B)Time required for each different product passing through the bottleneck
C)Selling price or sales revenue generated by each product produced through the bottleneck
D)Contribution margin per bottleneck hour for each product

Question

Quizplus · Accepted Answer

In order to improve profitability when faced with a bottleneck involving the production of two or more products, it is important for management to consider the contribution margin per bottleneck hour for each product. This is because the bottleneck limits the overall production capacity of the organization, and the goal is to maximize profitability within that limited capacity. By calculating the contribution margin per bottleneck hour for each product, management can identify which products generate the most profit within the given constraints and prioritize production accordingly. Factors such as time required and sales revenue are important, but without taking into account the contribution margin per bottleneck hour, management may miss opportunities to optimize profitability.

In Attempting to Improve Profitability When Faced with a Bottleneck