United Industries manufactures a number of products at its highly automated factory. the products are very popular, with demands 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

Business

Alani Russell

5 November, 12:46

United Industries manufactures a number of products at its highly automated factory. the products are very popular, with demands 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

+4

Answers (1)

Know the Answer?

Leonard Patrick · Answer 1

The correct answer is letter "D": Contribution margin per unit of the constrained resource.

Explanation:

The contribution margin per unit of constraint is obtained by dividing the units of constrained resources needed to make one unit of that product. A business owner might use this technique to decide which product's costs should be reduced or which price should be increased. It allows a company to determine the profitability of individual products by measuring how sales affect profits.