Outdoor Luggage, Inc., makes high-end hard-sided luggage for sports equipment. Data concerning three of the company's most popular models appear below. Fishing Guard Ski Golf Guard $ Guard Selling price per unit Variable cost per unit Plastic injection molding machine processing time required to produce one unit Pounds of plastic pellets per unit 260 $ 350 $ 150 $ 245 100 $ 105 6 minutes 12 minutes 11 minutes 15 pounds 20 pounds 12 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?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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
Golf
Fishing
Guard
Guard
Guard
Selling price per unit
Variable cost per unit
Plastic injection molding machine processing
time required to produce one unit
Pounds of plastic pellets per unit
$
$
260
$
100 $
350 $
$
245
150
105
6 minutes
12 minutes
11 minutes
15 pounds
20 pounds
12 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?
Transcribed Image Text: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 Golf Fishing Guard Guard Guard Selling price per unit Variable cost per unit Plastic injection molding machine processing time required to produce one unit Pounds of plastic pellets per unit $ $ 260 $ 100 $ 350 $ $ 245 150 105 6 minutes 12 minutes 11 minutes 15 pounds 20 pounds 12 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?
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