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Exercise 12-5 Utilizing a Constrained Resource [LO12-5] Outdoor Luggage Inc. makes high-end hard-sided luggage for sports equipment. Data concerning three of the company's most popular
Exercise 12-5 Utilizing a Constrained Resource [LO12-5] 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 $280 $90 Golf Guard $360 $160 Fishing Guard $245 $115 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 6 minutes 12 pounds 14 minutes 10 pounds 2 minutes 8 pounds Required: 1a. The total time available on the plastic injection molding 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? Ski Guard Golf Guard Fishing Guard Selling price per unit Variable cost per unit Contribution margin per unit Plastic injection molding machine processing time required to produce one unit Contribution margin per unit of the constrained resource minutes minutes minutes per minute per minute per minute 1b. Which product would be the most profitable use of this constraint? Fishing Guard O Golf Guard O Ski Guard 1c. Which product would be the least profitable use of this constraint? O Fishing Guard O Golf Guard Ski Guard 2a. A severe shortage of plastic pellets has required the company to cut back its production so much that the plastic injection molding machine is no longer the bottleneck. Instead, the constraint is the total available pounds of plastic pellets. What is contribution margin per unit of the constrained resources for Ski Guard, Golf Guard and Fishing Guard? Ski Guard Golf Guard Fishing Guard Selling price per unit Variable cost per unit Contribution margin per unit Pounds of plastic pellets required to produce one unit Contribution margin per unit of the constrained resource pounds per pound pounds per pound pounds per pound 2b. Which product would be the most profitable use of this constraint? O Golf Guard O Ski Guard O Fishing Guard 2c. Which product would be the least profitable use of this constraint? O Golf Guard O Ski Guard O Fishing Guard 3. Which product has the largest unit contribution margin? O Golf Guard O Fishing Guard O Ski Guard
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