The opportunity cost of using a unit of the constrained resource in a volume trade-off decision is determined by the profitability index of the company's least profitable product--even if none of that product is currently being made.

Question

Quizplus · Accepted Answer

The opportunity cost is determined by the profitability index of the most profitable product that could be produced with the constrained resource, not the least profitable one.

The Opportunity Cost of Using a Unit of the Constrained