Question

Kinsi Corporation manufactures five different products. All five of these products must pass through a stamping machine in its fabrication department. This machine is Kinsi's constrained resource. Kinsi would make the most profit if it produces the product that: generates the highest contribution margin per stamping machine hour. uses the least amount of stamping time. generates the highest contribution margin ratio. generates the highest contribution margin per unit.

Answer 1

Answer: Generates the highest contribution margin per stamping machine hour

Explanation:

Seeing as the machine is Kinsi's constrained resource, Kinsi should produce a product that gives them the most contribution margin per stamping machine hour.

The Contribution margin as you may or may not know, is the difference between the Selling Price per unit and Variable cost.

They should therefore seek a product that gives them the highest Contribution margin per the Stamping machine hour so as to cater for the cost of using the stamping machine and still make the most profit.