When Faced with Capacity Constraints, Managers Should

question 99

Multiple Choice

When faced with capacity constraints, managers should:

• A) maximise contribution margin per unit
• B) maximise profit per unit
• C) maximise contribution margin per unit of constrained resource
• D) reduce the number of products available

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Definitions:

Savings Account

A deposit account held at a bank or other financial institution providing principal security and a modest interest rate.

Opportunity Cost

The deficit of potential benefits that could be reaped from alternative options when one is picked.

Dollar Value

The worth of an item, service, or amount of money expressed in terms of the United States dollar currency.

Federal Income Tax

A tax levied by the U.S. federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.