What should a firm faced with a production constraint do to maximize total contribution margin? Question 14Answera.Promote those products having the highest contribution margin per unit of constrained resourceb.Promote those products having the highest contribution margin ratiosc.Promote those products having the lowest contribution margin per unit of constrained resourced.Promote those products having the highest unit contribution margins
Question
What should a firm faced with a production constraint do to maximize total contribution margin? Question 14Answera.Promote those products having the highest contribution margin per unit of constrained resourceb.Promote those products having the highest contribution margin ratiosc.Promote those products having the lowest contribution margin per unit of constrained resourced.Promote those products having the highest unit contribution margins
Solution
The firm should promote those products having the highest contribution margin per unit of constrained resource. This is because when a firm is faced with a production constraint, it means that there is a limit to the amount of resources available for production. Therefore, to maximize total contribution margin, the firm should focus on producing and promoting those products that provide the highest contribution margin per unit of the constrained resource. This will ensure that the firm gets the maximum return from the limited resources available.
Similar Questions
Consider the following production and cost data for two products, L and C: Product LProduct CContribution Margin per Unit$130$120Machine Setups Needed per Unit10 setups8 setupsThe company can only perform 65,000 machine setups each period due to limited skilled labour, and there is unlimited demand for each product. What is the largest possible total contribution margin that can be realized each period? Question 6Answera.$910,000b.$975,000c.$1,820,000d.$845,000
Multiple Choice QuestionWhen resources are constrained and products use different inputs, the company should produce the product with the:Multiple choice question.highest contribution marginhighest sales pricelowest variable cost per input unithighest contribution margin per unit of constrained resource
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Sunseri Tech sells 2 products, Speakers and TV's. The speakers have a per unit contribution margin of $6 and requires 0.25 machine hours to assemble. The TV's have a per unit contribution margin of $8 and require 0.6 machine hours to assemble. I Sunseri only has 65,000 machine hours that be dedicated to production, then what will the total contribution margin if they choose to only make the most profitable product? Group of answer choices$7,840,000$1,560,000$8,450,000$4,650,000
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