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.

Ski Guard Golf Guard Fishing Guard

Selling price per unit $300 $380 $225

Variable cost per unit $160 $170 $75

Plastic injection molding machine processing time required to produce one unit 7 minutes 6 minutes 4 minutes

Pounds of plastic pellets per unit 11 pounds 13 pounds 6 pounds

Required:

1a. 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?

2a. 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

Outdoor luggage Inc.

1. Contribution margin per unit of constrained resource:

2a. Contribution margin per pound of plastic pellets:

Ski Guard Golf Guard Fishing Guard Selling price per unit $ 300 $ 380 $ 225 Variable cost per unit $ 160 $ 170 $ 75 Contribution margin per unit $ 140 $ 210 $ 150 Processing time per unit 7 minutes 6 minutes 4 minutes Contribution margin per unit of constrained resource $ 20 $ 35 $ 37.5

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.