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14 June, 02:32

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

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Answers (1)
  1. 14 June, 02:59
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    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.
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