The Magic Microbrewery has a limited amount of vat capacity available in which it can ferment beer.In deciding which beers to brew,Magic management should consider:
A)The contribution margins of the individual beers.
B)The unit contribution margins of the individual beers.
C)The contribution margin ratios of the individual beers.
D)The contribution margin per unit of vat capacity of the individual beers.

Question

Quizplus · Accepted Answer

The best choice is to consider the contribution margin per unit of vat capacity of the individual beers. Since the Magic Microbrewery has limited vat capacity, it is important to maximize the contribution margin that can be earned from each unit of vat capacity. By calculating the contribution margin per unit of vat capacity, the brewery can determine which beers are the most profitable to produce within the limited capacity.

The Magic Microbrewery Has a Limited Amount of Vat Capacity