Outdoor Luggage, Inc., makes high-end hard-sided luggage for sports equipment. Data concerning three of the company’s...

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Accounting

Outdoor Luggage, Inc., makes high-end hard-sided luggage forsports equipment. Data concerning three of the company’s mostpopular models appear below.
Ski
Guard Golf
Guard Fishing
Guard
Selling price per unit $ 280 $ 200 $ 245
Variable cost per unit $ 90 $ 160 $ 115
Plastic injection molding machine processing
time required to produce one unit 6 minutes 14 minutes 2 minutes
Pounds of plastic pellets per unit 12 pounds 10 pounds 8 pounds
Required:
1. If we assume that the total time available on the plasticinjection molding machine is the constraint in the productionprocess, how much contribution margin per minute of the constrainedresource is earned by each product?
2. Which product offers the most profitable use of the plasticinjection molding machine?
3. If we assume that a severe shortage of plastic pellets hasrequired the company to cut back its production so much that itsnew constraint has become the total available pounds of plasticpellets, how much contribution margin per pound of the constrainedresource is earned by each product?
4. Which product offers the most profitable use of the plasticpellets?
5. Which product has the largest contribution margin perunit?

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Solution 1 Computation of contribution margin per minute of molding machine processing time Outdoor Luggage Inc Particulars Ski Guard Golf Guard Fishing Guard Selling price per unit 28000 20000 24500 Variable cost per unit 9000 16000 11500 Contribution margin per See Answer

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	Ski Guard		Golf Guard		Fishing Guard
Selling price per unit	$	280	$	200	$	245
Variable cost per unit	$	90	$	160	$	115
Plastic injection molding machine processing time required to produce one unit	6 minutes		14 minutes		2 minutes
Pounds of plastic pellets per unit	12 pounds		10 pounds		8 pounds