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

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 Golf Guard Fishing Guard Guard Selling price per unit Variable cost per unit Plastic injection molding machine processing 320 $ 200 $ 235 135 5 minutes 6 pounds 110 $ 13 minutes 11 minutes time required to produce one unit Pounds of plastic pellets per unit 14 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? 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 produc? (Round your final answers to 2 decimal places.) Ski Guard Golf Guard Fishing Guard Contribution margin per minute of the constrained resource per minute per minute per minute 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? (Round your final answers to 2 decimal places.) Ski Guard Golf Guard Fishing Guard Contribution margin per pound of the constrained resource per pound per pound per pound

Explanation / Answer

1) Contribution margin per minute of machine processing time: Ski Guard Golf Guard Fishing Guard Selling price per unit $            250 $             320 $             235 Variable cost per unit $            110 $             200 $             135 Contribution margin per unit $            140 $             120 $             100 Machine processing time required per unit in minutes 13 11 5 Contribution margin per minute of machine processing time: $        10.77 $         10.91 $         20.00 2) The fishing guard offers the most profitable use of the plastic injection molding machine. 3) Contribution margin per pount of plastic pellets: Ski Guard Golf Guard Fishing Guard Selling price per unit $            250 $             320 $             235 Variable cost per unit $            110 $             200 $             135 Contribution margin per unit $            140 $             120 $             100 Punds of plastic pellets required per unit 14 7 6 Contribution margin per pound of plastic pellet $        10.00 $         17.14 $         16.67 4) Golf guard provides the most profitable use of plastic pellets. 5) Ski guard has the largest contribution margin per unit.

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