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Situation 3: Constrained Resources (15 Points) Outdoor Luggage, Inc., makes high-end hard-sided luggage for sports equipment. Data concerning three of the company's most popular models
Situation 3: Constrained Resources (15 Points) Outdoor Luggage, Inc., makes high-end hard-sided luggage for sports equipment. Data concerning three of the company's most popular models appear below: Product Ski Guard Golf Guard Fishing Guard Selling price per unit $200 S300 $255 Variable Costs per unit 60 140 55 Plastic injection molding machine processing Time required to produce one unit 2 minutes 5 minutes 4 minutes Pounds of plastic pellets per unit 7 pounds 4 pounds 8 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? (6 points) 2. Which product offers the most profitable use of the plastic injection molding machine? (1 points) 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 carned by each product? (6 points) 4. Which product offers the most profitable use of the plastic pellets? (1 point) 5. Which product has the largest contribution margin per unit? Why wouldn't this product be the most profitable use of the constrained resource in either case? (2 points)
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