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 $ 260 $ 270 $ 305 Variable cost per unit $ 130 $ 130 $ 180 Plastic injection molding machine processing time required to produce one unit 4 minutes 6 minutes 9 minutes Pounds of plastic pellets per unit 9 pounds 16 pounds 7 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?

Answer 1

	Ski Guard	Golf Guard	Fishing Guard	TOTAL
A.sling Price Per unit	260	270	305
B. Variable cost per unit	130	130	180
C.Contribution(A-B) per unit	130	140	125
D. Minuted required per unit of production	4	6	9
E.Contribution per minutes(C/D)	32.5	23.33	13.89
F.Pounds of contribution margin	9	16	7
G.Contribution margin per pounds(C/F)	14.44	8.75	17.86

1. Answer refer in point no E of table

2. Product Ski Guard gives higest contribution margin per palstic injection molding machibne.

3. Answer is refered in point G of Table

4. Product Fishing Guard , as it hs the higset contribution margin ( refer point G in table)

5.Golf Guard 140 ( refer point C in table)