utdoor 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 Golf Guard Fishing Guard Selling price per unit $ 280 $ 330 $ 175 Variable cost per unit $ 140 $ 210 $ 115 Plastic injection moulding machine processing time required per unit 4 min 12 min 9 min Kgs of plastic pellets per unit 12 kg 15 kg 13 kg 1-a. The total time available on the plastic injection moulding 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? 1-b. Which product would be the most profitable use of this constraint? Ski Guard Fishing Guard Golf Guard 1-c. Which product would be the least profitable use of this constraint? Ski Guard Fishing Guard Golf Guard 2-a. A severe shortage of plastic pellets has required the company to cut back its production so much that the plastic injection moulding machine is no longer the bottleneck. Instead, the constraint is the total available kilograms of plastic pellets. What is the contribution margin per unit of the constrained resources for Ski Guard, Golf Guard and Fishing Guard? 2-b. Which product would be the most profitable use of this constraint? Ski Guard Fishing Guard Golf Guard 2-c. Which product would be the least profitable use of this constraint? Ski Guard Fishing Guard Golf Guard

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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	Golf Guard	Fishing Guard
Selling price per unit	$	280		$	330		$	175
Variable cost per unit	$	140		$	210		$	115
Plastic injection moulding machine processing time required per unit		4	min		12	min		9	min
Kgs of plastic pellets per unit		12	kg		15	kg		13	kg

1-a. The total time available on the plastic injection moulding 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?

1-b. Which product would be the most profitable use of this constraint?

Ski Guard
Fishing Guard
Golf Guard

1-c. Which product would be the least profitable use of this constraint?

Ski Guard
Fishing Guard
Golf Guard

2-a. A severe shortage of plastic pellets has required the company to cut back its production so much that the plastic injection moulding machine is no longer the bottleneck. Instead, the constraint is the total available kilograms of plastic pellets. What is the contribution margin per unit of the constrained resources for Ski Guard, Golf Guard and Fishing Guard?

2-b. Which product would be the most profitable use of this constraint?

Ski Guard
Fishing Guard
Golf Guard

2-c. Which product would be the least profitable use of this constraint?

Ski Guard
Fishing Guard
Golf Guard

3. Which product has the largest unit contribution margin?

Ski Guard
Fishing Guard
Golf Guard

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