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	$310			$340			$265
Variable cost per unit		$80			$140			$115
Plastic injection moulding machine processing    time required per unit		5 min			6 min			3 min
Kgs of plastic pellets per unit		6 kg			15 kg			6 kg

Required:
1a. The total time available on the plastic injection moulding 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?

1b. 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

3. Which product has the largest unit contribution margin?

• Ski Guard

• Fishing Guard

• Golf Guard

Answer 1