Products Green,Red,and White have unit contribution margins of $6.50,$12,and $10,respectively,and require 2,4,and 3 direct labor hours per unit,respectively.If demand currently is far exceeding supply,on which product should the company concentrate its efforts?
A)Green
B)Red
C)White
D)Either Green or Red

Question

Quizplus · Accepted Answer

The company should focus on the product with the highest contribution margin per labor hour. White has a contribution margin of $10 and requires 3 labor hours, resulting in a contribution margin per labor hour of $3.33, which is higher than Green's $3.25 and Red's $3.00.

Products Green,Red,and White Have Unit Contribution Margins of $6