Sales mix decisions should be based on the contribution margin per unit of scarce resource.

Question

Quizplus · Accepted Answer

Sales mix decisions involve deciding which products to produce and at what quantity to achieve the optimal overall profit. Since resources are often scarce and limited, such as labor, production capacity or raw materials, it is essential to consider the contribution margin per unit of the scarce resource. By prioritizing the products with the highest contribution margin per unit of scarce resource, the company can generate more profit and efficiently allocate its resources. Therefore, the statement is true.

Sales Mix Decisions Should Be Based on the Contribution Margin