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Homework answers / question archive / Outdoor Luggage, Inc

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 $ 210 $ 310 $ 265 Variable cost per unit S 70 S 150 S 130 Plastic injection molding machine processing 8 minutes 10 minutes 10 minutes time required to produce one unit Pounds of plastic pellets per unit 7 pounds 16 pounds 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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