If a company can make multiple products but has a resource constraint, it should proritize its...
If a company can make multiple products but has a resource constraint, it should proritize its production towards products with lower contribution margin per unit of the scare resource.
TRUE OR FALSE
Homework Answers
If a company is engaged in multiple products then contribution margin per scarce resources is to be calculated which gives us the maximum profit and maximum margin of individual product based on the scarce resources used by that individual product.
Higher the contribution margin per unit of scarce resources maximum priority of choosing to produce that product will be the highest because it will maximize the profit as compared to other individual product.
Therefore as in the given question if a company make multiple products but has constraint resources then it should prioritise its production based on the the product having the highest contribution margin per unit of scarce resources.
Therefore the correct answer is FALSE.
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