What should a firm faced with a production constraint do to maximize total contribution margin?
A) Promote those products having the highest unit contribution margins.
B) Promote those products having the highest contribution margin ratios.
C) Promote those products having the highest contribution margin per unit of constrained resource.
D) Promote those products having the highest contribution margins and contribution margin ratios.

Question

Quizplus · Accepted Answer

When a firm is faced with a production constraint, it should promote those products that have the highest contribution margin per unit of constrained resource. By doing so, the firm can maximize its overall contribution margin while still utilizing its limited resources effectively. Simply promoting products with the highest unit contribution margins or contribution margin ratios could lead to inefficient resource usage and lower overall profitability.

What Should a Firm Faced with a Production Constraint Do