Asked by Silvia Montañes Sintes on Jul 05, 2024
Verified
The lowest contribution margin per scarce resource is the most profitable.
Contribution Margin
The amount remaining from sales revenue after variable expenses are deducted, indicating the ability to cover fixed costs.
Scarce Resource
A resource with limited availability relative to its demand.
- Understand the importance of contribution margin per scarce resource in profitability analysis.
Verified Answer
FE
Faiza EttangiJul 09, 2024
Final Answer :
False
Explanation :
The statement is false. The highest contribution margin per scarce resource is the most profitable. This is because the scarce resource is the limiting factor and by maximizing the contribution margin from that particular resource, the overall profitability of the business can be increased.
Learning Objectives
- Understand the importance of contribution margin per scarce resource in profitability analysis.