Exercise 10-5 Utilizing a Constrained Resource [LO10-5] Outdoor Luggage Inc. mak
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Question
Exercise 10-5 Utilizing a Constrained Resource [LO10-5]
Outdoor Luggage Inc. makes high-end hard-sided luggage for sports equipment. Data concerning three of the company’s most popular models appear below.
The total time available on the plastic injection molding machine is the constraint in the production process. What is the contribution margin per unit of the constrained resources for Ski Guard, Golf Guard and Fishing Guard? (Round your answers to 2 decimal places.)
A severe shortage of plastic pellets has required the company to cut back its production so much that the plastic injection molding machine is no longer the bottleneck. Instead, the constraint is the total available pounds of plastic pellets. What is contribution margin per unit of the constrained resources for Ski Guard, Golf Guard and Fishing Guard? (Round your answers to 2 decimal places.)
Outdoor Luggage Inc. makes high-end hard-sided luggage for sports equipment. Data concerning three of the company’s most popular models appear below.
Explanation / Answer
Particlars Ski Guard Golf Guard Fishing Guard Selling price per unit $220 $380 $225 Variable cost per unit $100 $110 $115 Contribution/Unit $120 $270 $110 Plastic injection molding machine processing time required to produce one unit 5 minutes 9 minutes 8 minutes ContributionMArgin Per Unit of constrained Resource (A) Contribution Per Unit/ Time Per Unit 24 30 13.75 Pounds of plastic pellets per unit 14 pounds 8 pounds 6 pounds ContributionMArgin Per Unit of constrained Resource (B) Contribution Per Unit/ Pounds of Plastic Pellet Per Unit $8.57 $33.75 $18.33
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