Chapter 11, Problem 5E

Volume Trade-off Decisions
Outdoor Luggage, Inc., makes high-end, hard-sided luggage for sports equipment. Data concerning three of the company’s most popular models appear below.

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, bow 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? Why wouldn’t this product be the most profitable use of the constrained resource in either case?