A company should maximize the contribution margin per unit of constraining resource in order to maximize profits.

Question

Quizplus · Accepted Answer

Maximizing the contribution margin per unit of the constraining resource (the resource that is in shortest supply) ensures that a company efficiently utilizes its limited resources to generate the highest possible profits. This approach focuses on earning the maximum amount of profit from each unit of the limiting factor.

A Company Should Maximize the Contribution Margin Per Unit of Constraining