Exercise 12-5 Volume Trade-Off Decisions [LO12-5] Outdoor Luggage, Inc., makes high-end hard-sided luggage for sports...
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Exercise 12-5 Volume Trade-Off Decisions [LO12-5]
Outdoor Luggage, Inc., 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
$
240
$
370
$
225
Variable cost per unit
$
100
$
255
$
105
Plastic injection molding machine processing time required to produce one unit
7 minutes
5 minutes
7 minutes
Pounds of plastic pellets per unit
15 pounds
7 pounds
10 pounds
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?
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