When a company has a production constraint, total contribution margin will be maximized by emphasizing the products with the highest contribution margin per unit of the constrained resource.

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This is the principle of the Theory of Constraints, which is used to optimize production in situations where there is a constraint in the production process. By focusing on the products with the highest contribution margin per unit of the constrained resource, the company can maximize its profitability.

When a Company Has a Production Constraint, Total Contribution Margin