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		$	330		$	205
Variable cost per unit	$	120		$	180		$	135
Plastic injection molding machine processing time required to produce one unit	9 minutes			12 minutes			11 minutes
Pounds of plastic pellets per unit	12 pounds			15 pounds			11 pounds

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.)

	Ski Guard		Golf Guard		Fishing Guard
Contribution margin per minute of the constrained resource		per minute		per minute		per minute

Which product offers the most profitable use of the plastic injection molding machine?

Ski Gaurd - Golf gaurd - fishing gaurd

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
Contribution margin per pound of the constrained resource		per pound		per pound		per pound

Which product offers the most profitable use of the plastic pellets?

Golf Gaurd - ski gaurd - fish gaurd

Which product has the largest contribution margin per unit?

Golf Gaurd - ski gaurd - fish gaurd

Answer 1

1
	Ski Guard	Golf Guard	Fishing Guard
Selling price per unit	260	330	205
Less: Variable cost per unit	120	180	135
Contribution margin per unit	140	150	70
Plastic injection molding machine processing time per unit	9	12	11
Contribution margin per minute of the constrained resource	15.56	12.50	6.36
2
Ski Guard
3
	Ski Guard	Golf Guard	Fishing Guard
Selling price per unit	260	330	205
Less: Variable cost per unit	120	180	135
Contribution margin per unit	140	150	70
Pounds of plastic pellets per unit	12	15	11
Contribution margin per minute of the constrained resource	11.67	10.00	6.36
4
Ski Guard
5
Golf Guard