Outdoor Luggage Inc. makes high-end hard-sided luggage for sports equipment. Dat

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. 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? Which product would be the most profitable use of this constraint? Ski Guard Golf Guard Fishing Guard Which product would be the least profitable use of this constraint? Ski Guard Golf Guard Fishing Guard 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?

Explanation / Answer

1a)    Ski Golf Fishing

Seling price $230 $330 $265

less: variable cost $90 $150 $105

Contribution per unit $140 $180 $160

Time required to produce per unit 4 10 5

Contribution margin pe unit per minute $35 $18 $32

1b) Ski guard is the most profitable use of constraint, becasue its contribution margin per unit per minute is highest among all

1c) Golf guard is the least profitable use of constraint, becasue its contribution margin per unit per minute is lowest among all

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