Which is the approach to take in the short-run when considering the most efficient sales mix where there is a limiting factor?

Question

Quizplus · Accepted Answer

The most efficient sales mix in the short-run when there is a limiting factor should be based on a comparison of the contribution margin per limiting factor for each alternative. This is because the limiting factor (which could be a machine, labor hours, or any other factor) restricts the amount of output that can be produced, and so the profitability of different products or services will depend on how much contribution margin they generate per unit of the limiting factor used. By comparing the contribution margin per limiting factor for each alternative, a business can identify the combination of products or services that will generate the highest total contribution margin within the constraints of the limiting factor.

Which Is the Approach to Take in the Short-Run When