Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Outdoor Luggage, Incorporated, 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, Incorporated, 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 $ 230 $ 330 $ 265
Variable cost per unit $ 90 $ 150 $ 105
Plastic injection molding machine processing time required to produce one unit 4 minutes 10 minutes 5 minutes
Pounds of plastic pellets per unit 5 pounds 11 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?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Foreign Corrupt Practices Act Compliance Guidebook Protecting Your Organization From Bribery And Corruption

Authors: Martin T. Biegelman, Daniel R. Biegelman

1st Edition

0470527935, 978-0470527931

More Books

Students also viewed these Accounting questions