When There Is a Production Constraint,a Company Should Emphasize the Products

question 109

Multiple Choice

When there is a production constraint,a company should emphasize the products with:

• A)the highest unit contribution margins.
• B)the highest contribution margin ratios.
• C)the highest contribution margin per unit of the constrained resource.
• D)the highest contribution margins and contribution margin ratios.

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Definitions:

Machine-Hours

A measure of production time, calculating the total hours a machine is operated in the production of goods.

Actual Level

The real, observed state or amount of something, rather than estimated or predicted levels.

Variable Overhead Rate

The rate at which variable overhead costs fluctuate with changes in activity level or production volume, expressed per unit of activity.

Fixed Manufacturing Overhead

The consistent, static costs associated with manufacturing a product, such as rent for factory premises or salaries for permanent staff, which do not change with production volume.