Outdoor Luggage, Inc., makes high-end hard-sided luggage for sports equipment. D
ID: 2399605 • Letter: O
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
$
250
$
320
$
235
Variable cost per unit
$
110
$
200
$
135
Plastic injection molding machine processing
time required to produce one unit
13 minutes
11 minutes
5 minutes
Pounds of plastic pellets per unit
14 pounds
7 pounds
6 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 product? (Round your final answers to 2 decimal places.)
requirement_content
requr_content_cntr
requirement_cntr
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.)
requirement_content
requr_content_cntr
requirement_cntr
Ski Guard
Golf Guard
Fishing Guard
Contribution margin per pound of the constrained resource
per pound
per pound
per pound
Ski
Guard
Golf
Guard
Fishing
Guard
Selling price per unit
$
250
$
320
$
235
Variable cost per unit
$
110
$
200
$
135
Plastic injection molding machine processing
time required to produce one unit
13 minutes
11 minutes
5 minutes
Pounds of plastic pellets per unit
14 pounds
7 pounds
6 pounds
Explanation / Answer
Req 1: Ski Guard Golf Guard Fishing Guard Selling price per unit 250 320 235 Less: Variable cost per unit 110 200 135 Contribution margin per unit 140 120 100 Divide: Processing time in minutes 13 11 5 Contribution mrgin per minute 10.77 10.91 20 Req 2: Fishing Guard is most profitable Req 3: Ski Guard Golf Guard Fishing Guard Selling price per unit 250 320 235 Less: Variable cost per unit 110 200 135 Contribution margin per unit 140 120 100 Divide: Pound of Plastic pellets 14 7 6 Contribution margin per pound 10 17.14 16.67 Req 4: Golf Guard Product is most profitable Req 5: Ski Guard provides the largest contribution margin per unit
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