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. Fishing Guard 275 Ski Guard 230 $ 80 $ 12 minutes 14 pounds 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 Golf Guard 320 $ 160 $ 8 minutes 15 pounds 140 5 minutes 13 pounds

Answer 1

	Ski Guard	Golf Guard	Fishing Guard
Selling price per unit (i)	230	320	275
Variable cost per unit (ii)	80	160	140
Contribution margin per unit (iii) = (i) - (ii)	150	160	135
Plastic injection molding machine processing time required to produce one unit (iv)	12 minutes	8 minutes	5 minutes
Contribution margin per minute of Plastic injection molding machine (iii)/(iv)	150/12 = $12.5	160/8 = $20	135/5 = $27
Pounds of contribution margin per pound per unit (v)	14 pounds	15 pounds	13 pounds
Contribution margin per pound of plastic pellets (iii)/(v)	150/14 = $10.71	160/15 = $10.67	135/13 = $10.38

1.

	Ski Guard	Golf Guard	Fishing Guard
Contribution margin per minute of the constrained resource	$12.5	$20	$27

	Ski Guard	Golf Guard	Fishing Guard
Contribution margin per pound of the constrained resource	$10.71	$10.67	$10.38

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