If a Company Produces Its Products in a Constrained Resource

question 112

Multiple Choice

If a company produces its products in a constrained resource environment,the company should

• A)Always produce the product with the lowest contribution margin per constrained resource.
• B)Always produce the product with the highest contribution margin per constrained resource.
• C)Produce a mix of products such that opportunity cost is minimized.
• D)Produce a mix of products so that customer service needs and customer preferences are met.

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Definitions:

Return Requirement

The minimum amount of profit an investor expects to make on an investment, which determines the worthiness of entering or continuing an investment.

Cash Flows

The overall transaction of cash and cash-equivalent assets between the inner and outer boundaries of a business.

Over-Valued

Describes a security or asset priced higher than its true intrinsic value, often due to speculative demand.

Future Value

The amount an asset or cash will be worth at a specified future time, identical in value to a defined sum today.