Outdoor Luggage Inc. makes high end hard-sded luggage for sports equipment. Data

Question

Outdoor Luggage Inc. makes high end hard-sded luggage for sports equipment. Data concerning three of the company's most popular models appear below Ski Guad Golf Guard Fishing Guard Seling price per unit Variable cost per unit Plastic injection molding machine processing time required to produce one unit Pounds of plastic pellots por unit $80 5 minulers pounds S340 $140 6 minuters 15 pounds 5266 $115 3 minutes 6 pounds Required: 1a. The total tme 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? Ski Golf Seling price per unit Variable cest per unit Contribution margin per unit Plastic injection molding machine processing time required to produce one unt Contribution margin per unit of the constrained resource minutes minutes per minute per minute per minute 1b. Which product would be the most proftable use of this constraint? 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 O 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 botteneck. Instead, the constraint is the total available pounds of plasic pellets. What is the contribution margin per unit of the constrained resources for Ski Guard, Golf Guard and Fishing Guard? Seling price per unit Variable cost per unit Contribution margin per unit Pounds of plastie pellets required to produce one unit Contribution margin per unit of the constrained resource pounds pounds pounds per pound per pound per pound

Explanation / Answer

Answer

Ski Guard

Golf Guard

Fishing Guard

Selling price per unit

             310

               340

                     265

Variable cost per unit

               80

               140

                     115

Contribution Margin per unit

             230

               200

                     150

Plastic injection molding machine processing time required to produce one unit

5 minutes

6 minutes

3 minutes

Contribution Margin per unit of the constrained resource

(Contribution Margin / Constrain resource)

46

(230 / 5)

33.33

(200 / 6)

                       50

(150 / 3)

Per Minute

1-b

Fishing Guard, As contribution margin per constrain is highest.

1-c

Gold Guard, As contribution margin per constrain is Lowest.

2-a

Ski Guard

Golf Guard

Fishing Guard

Selling price per unit

             310

               340

                     265

Variable cost per unit

               80

               140

                     115

Contribution Margin per unit

             230

               200

                     150

Plastic injection molding machine processing time required to produce one unit

6 pounds

15 pounds

6 pounds

Contribution Margin per unit of the constrained resource

(Contribution Margin / Constrain resource)

38.33

(230 / 6)

13.33

(200 / 15)

                       25

(150 / 6)

Per Pound

Ski Guard

Golf Guard

Fishing Guard

Selling price per unit

             310

               340

                     265

Variable cost per unit

               80

               140

                     115

Contribution Margin per unit

             230

               200

                     150

Plastic injection molding machine processing time required to produce one unit

5 minutes

6 minutes

3 minutes

Contribution Margin per unit of the constrained resource

(Contribution Margin / Constrain resource)

46

(230 / 5)

33.33

(200 / 6)

                       50

(150 / 3)

Per Minute

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