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. 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 Ski Golf Fishing Guard Guard Guard 260 $ 270 $ 305 130 $ 130 $ 180 4 minutes 6 minutes 9 minutes 9 pounds 16 pounds 7 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? ant 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 per minute Golf Guard per minute Fishing Guard per minute Contribution margin per minute of the constrained resource

Answer 1

1) Contribution margin per minute

	Ski guard	Golf guard	Fishing guard
Selling price	260	270	305
Variable cost	130	130	180
Contribution margin	130	140	125
Minute per unit	4	6	9
Contribution margin per minute	32.5	23.33	13.89

2) Ski guard

3) Contribution margin per pound

	Ski guard	Golf guard	Fishing guard
Selling price	260	270	305
Variable cost	130	130	180
Contribution margin	130	140	125
Pound per unit	9	16	7
Contribution margin per pound	14.44	8.75	17.86

4) Fishing guard

5) Golf guard