Exercise 10-5 Utilizing a Constrained Resource [LO10-5] Outdoor Luggage Inc. mak
ID: 2582032 • Letter: E
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. Ski Guard Golf Guard Fishing Guard Selling price per unit $220 $380 $225 Variable cost per unit $100 $110 $115 Plastic injection molding machine processing time required to produce one unit 5 minutes 9 minutes 8 minutes Pounds of plastic pellets per unit 14 pounds 8 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? (Round your answers to 2 decimal places.)
1b. Which product would be the most profitable use of this constraint? Golf Guard Fishing Guard Ski Guard
1c. Which product would be the least profitable use of this constraint? Golf Guard Fishing Guard Ski 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? (Round your answers to 2 decimal places.)
2b. Which product would be the most profitable use of this constraint? Golf Guard Ski Guard Fishing Guard
2c. Which product would be the least profitable use of this constraint? Golf Guard Ski Guard Fishing Guard
3. Which product has the largest unit contribution margin? Golf Guard Fishing Guard Ski Guard
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 belovw Ski Guard Golf Guard Fishing Guard $310 $150 $330 $150 $275 $85 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 8 minutes 7 pounds 15 minutes 9 pounds 5 minutes 10 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? (Round your answers to 2 decimal places.) Ski Guard Golf Guard Fishing Guard Selling price per unit Variable cost per unit Contribution margin per unit Plastic injection molding machine processing time required to produce one unit Contribution margin per unit of the constrained resource minutes minutes minutes per minute per minute per minute 1b. Which product would be the most profitable use of this constraint? O Fishing Guard O Golf Guard O Ski Guard 1c. Which product would be the least profitable use of this constraint? O Fishing Guard O Golf Guard Ski GuardExplanation / Answer
1-a) Ski Golf Fishing Guard Guard Guard Selling price per unit 310 330 275 Variable cost per unit 150 150 85 contribution margin per unit 160 180 190 plastic injection molding machine processing time required to produce one unit 8 mins 15mins 5 mins Contribution margin per unit of the restrained resource 20per min 12per min 38per min 1-b) Fishing Guard 1-c) Golf Guard 2a) Ski Golf Fishing Guard Guard Guard Selling price per unit 310 330 275 Variable cost per unit 150 150 85 contribution margin per unit 160 180 190 pounds of plastic pellets required to produce one unit 7 pounds 9 pounds 10 pounds Contribution margin per unit of the restrained resource 22.86 20 19 2-b) Ski Guard 2-c) Fishing Guard 3) Fishing Guard
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