Prioritize by contribution per unit of scarce direct material Steps: - Compute contribution per unit (selling price minus variable costs: material + labour + variable overheads): M = 240 - 190 = 50; N = 280 - 240 = 40; O = 250 - 215 = 35. - Divide contribution by direct material cost (limiting factor): M = 50/110 ≈ 0.45; N = 40/120 ≈ 0.33; O = 35/90 ≈ 0.39. - Rank in descending order of this ratio to allocate scarce material for maximum profit: M (0.45), O (0.39), N (0.33). - Produce in order M, then O, then N. Why B is correct: - It follows the limiting factor rule: rank by contribution per unit of scarce resource to maximize total contribution and profit. Why the others are wrong: - A: Ranks N before O, but N's ratio (0.33) is lower than O's (0.39), wasting material on lower return. - C: Starts with N, which has the lowest ratio, forgoing higher returns from M and O. - D: Starts with O, but M's higher ratio (0.45) should precede …