A firm that decides to emphasize those goods with the highest contribution margin per unit may have made an incorrect decision when the company has capacity constraints in the form of limited resources.

Question

Quizplus · Accepted Answer

Focusing solely on goods with the highest contribution margin per unit ignores the potential bottleneck created by limited resources or capacity constraints, which could lead to suboptimal allocation of resources and reduced overall profitability.

A Firm That Decides to Emphasize Those Goods with the Highest