Question

Outdoor Luggage, Inc., makes high-end hard-sided luggage for sports equipment. Data concerning three of the company's most popular models appear below. Golf Guard 380 5 170 Fishing Guard 225 $ S Selling price per unit Variable cost per unit Plastic injection molding machine processing time required to produce one unit Pounds of plastic pellets per unit Guard 380 160 7 minutes 11 pounds 6 minutes 13 pounds 4 minutes 6 pounds Required: 1. If we assume that the total time available on the plastic injection molding machine is the constraint in the production process, how much contribution margin per minute of the constrained resource is earned by each product? 2. Which product offers the most profitable use of the plastic injection molding machine? 3. If we assume that a severe shortage of plastic pellets has required the company to cut back its production so much that its new constraint has become the total available pounds of plastic pellets, how much contribution margin per pound of the constrained resource is earned by each product? 4. Which product offers the most profitable use of the plastic pellets? 5. Which product has the largest contribution margin per unit? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 If we assume that the total time available on the plastic injection molding machine is the constraint in the production process, how much contribution margin per minute of the constrained resource is earned by each product? (Round your final answers to 2 decimal places) Ski Guard Golf Guard Fishing Guard Contribution margin per minute of the constrained resource per per minute per minute Required 2 >

Answer 1

1)				ski	Golf	fishing
				Guard	Gurard	Guard
	Selling price per unit			300	380	225
	Variable cost per unit			160	170	75
	contribution margin			140	210	150
	machine processing min			7	6	4
	Contribution margin per min			20.00	35.00	37.50
2)	Fishing guard
3)				ski	Golf	fishing
				Guard	Gurard	Guard
	Selling price per unit			300	380	225
	Variable cost per unit			160	170	75
	contribution margin			140	210	150
	pounds per unit			11	13	6
	Contribution margin per pound			12.73	16.15	25.00
4)	Fishing guard
5)	Golf guard has largest contribution margin per unit