Asked by Emily Schreurs on Jun 21, 2024
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United Industries manufactures a number of products at its highly automated factory.The products are very popular, with demand 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
Constrained Resource
A factor within a production process that limits the output or efficiency, such as machinery capacity or raw material supply.
Contribution Margin
The amount remaining from sales revenue after variable expenses are deducted, indicating how much revenue is contributing to fixed costs and profit.
Automated Factory
A production facility that relies heavily on automated processes and machinery to manufacture goods with minimal human intervention.
- Understand the significance of contribution margin and contribution margin ratio in decision-making processes related to products.
Verified Answer
Learning Objectives
- Understand the significance of contribution margin and contribution margin ratio in decision-making processes related to products.
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