Rank by contribution per unit of scarce material

Steps:

• Compute contribution margin (CM = selling price - variable costs of material and labor): X ($100 -$40 - $20 =$40), Y ($120 -$45 - $25 =$50), Z ($150 -$48 - $20 =$82).
• Divide CM by material cost (scarce resource): X ($40/$40 = 1), Y ($50/$45 ≈ 1.11), Z ($82/$48 ≈ 1.71).
• Rank products in descending order of CM per material dollar: Z (highest), Y, X (lowest).
• Produce in this order to maximize total contribution and profit.

Why B is correct:

• Option B (Z Y X) matches the ranking by CM per unit of limiting factor (material), per throughput accounting principle for constrained resources.

Why the others are wrong:

• A: Prioritizes Y over Z, but Z yields more CM per material dollar.
• C: Starts with X, which has the lowest CM per material dollar.
• D: Places X before Y after Z, but Y's ratio exceeds X's.

Final answer: B