CAF-5 · Chapter 15 · Question 1 of 10
When a manufacturing company is operating at full capacity and faces a single scarce resource (such as limited machine hours or raw materials), in what order should it rank its products to maximize overall profitability?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) By highest contribution margin per unit of the limiting factor
Explanation
The study text highlights that when a single limiting factor (like machine hours or material) restricts production, the profit-maximizing production plan is established by ranking the products based on the contribution margin they generate per unit of the limiting factor consumed.
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