Outdoor Luggage Inc makes highend hardsided luggage for spor

Outdoor Luggage, Inc., makes high-end hard-sided luggage for sports equipment. Data concerning three of the company’s most popular models appear below.

Ski

Guard

Golf

Guard

Fishing

Guard

Selling price per unit

$

250

$

320

$

235

Variable cost per unit

$

110

$

200

$

135

Plastic injection molding machine processing

time required to produce one unit

13 minutes

11 minutes

5 minutes

Pounds of plastic pellets per unit

14 pounds

7 pounds

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?

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.)

requirement_content

requr_content_cntr

requirement_cntr

Ski Guard

Golf Guard

Fishing Guard

Contribution margin per minute of the constrained resource

per minute

per minute

per minute

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? (Round your final answers to 2 decimal places.)

requirement_content

requr_content_cntr

requirement_cntr

Ski Guard

Golf Guard

Fishing Guard

Contribution margin per pound of the constrained resource

per pound

per pound

per pound

	Ski Guard	Golf Guard	Fishing Guard
Selling price per unit	$	250		$	320		$	235
Variable cost per unit	$	110		$	200		$	135
Plastic injection molding machine processing time required to produce one unit	13 minutes		11 minutes		5 minutes
Pounds of plastic pellets per unit	14 pounds		7 pounds		6 pounds

Solution

Req 1: Ski Guard Golf Guard Fishing Guard Selling price per unit 250 320 235 Less: Variable cost per unit 110 200 135 Contribution margin per unit 140 120 100 Divide: Processing time in minutes 13 11 5 Contribution mrgin per minute 10.77 10.91 20 Req 2: Fishing Guard is most profitable Req 3: Ski Guard Golf Guard Fishing Guard Selling price per unit 250 320 235 Less: Variable cost per unit 110 200 135 Contribution margin per unit 140 120 100 Divide: Pound of Plastic pellets 14 7 6 Contribution margin per pound 10 17.14 16.67 Req 4: Golf Guard Product is most profitable Req 5: Ski Guard provides the largest contribution margin per unit