Where several products are produced and there is a scarce factor,the rule for deciding on the optimum product mix is:

Question

Quizplus · Accepted Answer

The correct approach when dealing with multiple products and a scarce resource is to prioritize production based on the highest contribution margin per unit of the scarce factor. This ensures the most efficient use of the limited resource to maximize overall profitability. After allocating resources to the product with the highest contribution margin per unit of scarce factor, any remaining resources should be used for the product with the next highest contribution margin per unit of the scarce factor, and so on. This strategy optimizes the product mix under resource constraints.

Where Several Products Are Produced and There Is a Scarce