For Managers Attempting to Maximize Operating Income for a Product

question 156

Multiple Choice

For managers attempting to maximize operating income for a product offering with a great deal of variety, product-mix decisions must usually take into account:

• A) more than one constraining resource
• B) just those products with the greatest contribution margin per constraining resource
• C) products that produce a profit above the full costs of the product
• D) how to maximize the selling price of all the products

---

Definitions:

Margin Of Safety

The difference between actual or projected sales and the break-even point, indicating the amount by which sales can drop before the business incurs a loss.

Variable Expenses

Charges that escalate or decrease in sync with production quantities or sales levels, involving materials and workforce.

Fixed Expenses

Costs that do not change with the level of production or sales over a short period, such as rent or salaries.

Contribution Margin Ratio

A metric used to assess a product's profitability, calculated by subtracting variable costs from sales revenue and dividing by sales revenue.