A company should always promote the product:
A) With the highest per unit contribution margin
B) That results in the highest total contribution margin
C) With the lowest variable cost per unit
D) With the least waste

Question

Quizplus · Accepted Answer

Promoting the product with the highest total contribution margin will generate the highest profit for the company. This is because the contribution margin is the difference between the selling price and variable costs, and promoting a product with a high contribution margin means that the company will earn more revenue per unit sold and incur lower variable costs per unit. In contrast, promoting a product with the highest per unit contribution margin or the lowest variable cost per unit may not necessarily result in the highest profits if the total volume of sales is low. Additionally, promoting a product with the least waste does not necessarily guarantee higher profits if that product does not have a high demand or generates low revenues.

A Company Should Always Promote the Product