United Industries manufactures a number of products at its highly automated factory. The products are very popular, with demand far exceeding the factory's capacity. To maximize profit, management should rank products based on their:
A) gross margin
B) contribution margin
C) selling price
D) contribution margin per unit of the constrained resource

Question

Quizplus · Accepted Answer

To maximize profit in a situation where demand exceeds capacity, it is important to prioritize production of products that generate the highest contribution margin per unit of the constrained resource. This ensures efficient use of the limited resources available and maximizes the total contribution margin earned by the company. Therefore, the best choice is option D - contribution margin per unit of the constrained resource.

United Industries Manufactures a Number of Products at Its Highly