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.

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?

        

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?

        

Outdoor Luggage Inc. makes high-end hard-sided luggage for sports equipment. Data concerning three of the company’s most popular models appear below.

Explanation / Answer

Answer:1 a

Answer:1 b Most profitable-Golf Guard (Cpntribution margin is highest)

Answer:1 c Least Profitable-SKI Guard (Cpntribution margin is lowest)

Answer:2 a

Answer:2 b Most profitable-Golf Guard (Cpntribution margin is highest)

Answer:2 c Least Profitable-Fishing Guard (Cpntribution margin is lowest)

Answer:2d Golf Guard

Particulars Ski Guard Glof Guard Fishing Guard Selling price per unit 290 390 195 Variable cost per unit 160 200 105 Contribution margin per unit 130 190 90 constraint 12 6 8 Contribution margin per unit of constrained 10.83333333 31.66666667 11.25

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