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.

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? (Round your final answers to 2 decimal places.)

2. 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 Selling price per unit $ 300 $ 380 $ 225 Variable cost per unit $ 160 $ 170 $ 75 Plastic injection molding machine processing
time required to produce one unit 7 minutes 6 minutes 4 minutes Pounds of plastic pellets per unit 11 pounds 13 pounds 6 pounds

Explanation / Answer

Ski Guard Golf Guard Fishing Guard Selling price per unit 300 380 225 Variable cost per unit 160 170 75 Contribution margin per unit 140 210 150 Plastic injection molding machine processing time required to produce one unit 7 6 4 Contribution margin per minute of the constrained resource 20 35 37.5 Ski Guard Golf Guard Fishing Guard Selling price per unit 300 380 225 Variable cost per unit 160 170 75 Contribution margin per unit 140 210 150 Pounds of plastic pellets per unit 11 13 6 Contribution margin per minute of the constrained resource 12.73 16.15 25

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