FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Aa 75.

Outdoor Luggage, Incorporated, makes high-end hard-sided luggage for sports equipment. Data concerning three of the company's
most popular models appear below.
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
Ski Guard
$ 250
$ 110
13 minutes
14 pounds
Golf Guard
$ 320
$ 200
11 minutes
7 pounds
Fishing Guard
$ 235
$ 135
5 minutes
6 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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Transcribed Image Text:Outdoor Luggage, Incorporated, makes high-end hard-sided luggage for sports equipment. Data concerning three of the company's most popular models appear below. 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 Ski Guard $ 250 $ 110 13 minutes 14 pounds Golf Guard $ 320 $ 200 11 minutes 7 pounds Fishing Guard $ 235 $ 135 5 minutes 6 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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