Exercise 12-5 Utilizing a Constrained Resource [L012-5] Outdoor Luggage Inc. mak

Question

Exercise 12-5 Utilizing a Constrained Resource [L012-5] 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 Golf Fishing Guard Guard Guard S310 $390S215 S7O $160S95 Selling price per unit Variable cost per unit Plastic injection molding machine time required to produce one unit Pounds of plastic pellets per unit minutes 14 minutes minutes 15 pounds pounds pounds Required: a.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? unit Variable cost per unit Contribution r unt Plastic injection molding machine processing time one unit minute5 uired to per minute margin per r unit of the constrained resource per minute b.Which product would be the most profitable use of this constraint? Fishing Guard Golf Guard Ski Guard 1c. Which product would be the least profitable use of this constraint? Fishing Guard Golf Guard Ski Guard

Explanation / Answer

1a.

1b.

Which product would be the most profitable use of this constraint

Fishing Guard

1c.

Which product would be the least profitable use of this constraint

Golf Guard

2a.

2b.

Which product would be the most profitable use of this constraint

Golf Gaurd

2c.

Which product would be the least profitable use of this constraint

Fishing Gaurd

3.

Which product has the largest unit contribution margin

Ski Guard

Ski Guard Golf Guard Fishing Guard Selling price per unit 310 390 215 Variable cost per unit 70 160 95 Contribution margin per unit 240 230 120 Plastic injection molding machine processing time required to produce one unit 11 minutes 11 minutes 2 minutes Contribution margin per unit of the constrained resource 21.82 20.91 60

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