If a company has the capacity to produce either 10,000 units of Product A or 10,000 units of Product B; assuming fixed costs are the same,production restrictions are the same for both products,and the markets for both products are unlimited; the company should commit 100% of its capacity to the product that has the higher contribution margin per unit of operating capacity.

Question

Quizplus · Accepted Answer

This is because the product with the higher contribution margin per unit of operating capacity will generate more profit per unit produced, maximizing the company's overall profit potential.

If a Company Has the Capacity to Produce Either 10,000