To maximize total contribution margin, a firm faced with a production constraint should:
A)promote those products having the highest contribution margin ratios.
B)promote those products having the highest contribution margin per unit of constrained resource.
C)promote those products having the highest unit contribution margins.
D)promote those products having the highest contribution margins and contribution margin ratios.

Question

Quizplus · Accepted Answer

When faced with a production constraint, the best way to maximize total contribution margin is to promote those products that generate the highest contribution margin per unit of constrained resource. This approach ensures that the limited resource is used most efficiently, maximizing the total contribution margin for the firm. While promoting products with high contribution margin ratios or unit contribution margins may generate some additional profit, it does not necessarily take into account the production constraint and could lead to an inefficient use of resources.

To Maximize Total Contribution Margin, a Firm Faced with a Production