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Outdoor Luggage Inc. makes high-end hard-sided luggage for sports equipment. Data concerning three of the companys most popular models appear below: Ski Guard Golf Guard

Outdoor Luggage Inc. makes high-end hard-sided luggage for sports equipment. Data concerning three of the companys most popular models appear below:

Ski Guard Golf Guard Fishing Guard
Selling Price per unit $250 $340 $265
Variable cost per unit $80 $140 $115
Plastic injection molding machine processing time required to product one unit 5 minutes 6 minutes 3 minutes
pounds of plastic pellets per unit 6 pounds 15 pounds

6 pounds

1. If we assume 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 for 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 constrained resource is earned by each product?

4. Which product offers the most profitable use of plastic pellets?

5. Which product has the largest contribution margin per unit?

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