Below is the discussion post – I am still not understanding what is meant by maximizing contribution margin per
Managers often try to maximize the contribution margin per unit of a particular resource that limits output capacity. The following are five familiar types of business.
- Small medical or dental practice
- Builder of residential housing
- Auto dealer’s service department
A) For each type of business, identify the factor that you believe is the most likely to limit potential output capacity.
B) Suggest several ways (other than raising prices) each business can maximize the contribution margin per unit of this limiting resource. (Hint: These types of businesses usually implement the types of strategies that you are likely to suggest. So, your solution to this case can explain basic characteristics of businesses that you personally have observed).