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CSS Financial and Cost Accounting P-1 QUESTION #1211
Question 1
In a sales mix decision, the product with the highest contribution margin per unit should be:
  • Sold exclusively, regardless of customer demand.
  • Prioritized when resources are constrained.✔️
  • Avoided to reduce risk.
  • Discounted to maximize revenue.
Correct Answer Explanation
When resources (such as machine hours or materials) are constrained, products should be ranked by contribution margin per unit of the limiting factor (not just per unit). The product yielding the highest contribution margin per scarce resource should be prioritized to maximize total contribution and profit. Selling exclusively ignores demand and other constraints.