Question

In scarce resources decisions, the decision focus is on

            a. incremental cost per unit of output.

            b. incremental cost per unit of scarce resource.

            c. contribution margin per unit of output.

            d. contribution margin per unit of scarce resource.

            e. revenue per unit of output.

Please provide a brief explanation of answer

Answer 1

D. Contribution margin per unit of scare resource.

Explanation-

In case of scare resource we have to decide which product to sell or produce more to earn more. In case of scare resource, focus is on scare resource usage. So in deciding that company focus on how much it can earn by use of per scare resource in different products or goods use. This will be calculated by contribution margin per unit of scare resource. This will lead to higher profits by use of scare resource in higher contribution margin per unit of scare resources.