We have made the point that managers often attempt to maximize the contribution margin per unit of

Question:

We have made the point that managers often attempt to maximize the per unit of a particular resource that limits output capacity. The following are five familiar types of businesses:
1. Small medical or dental practice
2. Restaurant
3. Supermarket
4. Builder of residential housing
5. Auto dealer’s service department

Instructions
With a group of students:
a. For each type of business, identify the factor that you believe is most likely to limit potential output capacity.
b. Suggest several ways (other than raising prices) the business can maximize the per unit of this limiting resource.

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...