Required: 1. If the total time available on the plastic injection molding machine is the constraint, 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 a severe shortage of plastic pellets required the company to cut back 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?
Required: 1. If the total time available on the plastic injection molding machine is the constraint, 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 a severe shortage of plastic pellets required the company to cut back 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Sagar
Transcribed Image Text:Outdoor Luggage, Incorporated, makes high-end hard-sided luggage for sports equipment. Data concerning three of the company's
most popular models appear below:
Ski Guard
Golf Guard
Fishing Guard
Selling price per unit
$ 250
Variable cost per unit
$ 110
$ 320
$ 210
$ 350
$ 155
Plastic injection molding machine processing time
required to produce one unit.
Pounds of plastic pellets per unit
14 minutes
9 pounds
13 minutes
10 pounds
20 minutes
14 pounds
Required:
1. If the total time available on the plastic injection molding machine is the constraint, 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 a severe shortage of plastic pellets required the company to cut back 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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