Natural Orange JuiceColaLemonadePunchSelling price per case$19.10$20.25$27.10$39.50Variable cost per case$15.90$14.40$21.50$29.80Cases sold per foot of shelf space per day10242522Miller has a maximum front shelf space of 12 feet to devote to the four drinks. She wants a minimum of 1 footand a maximum of 6 feet of front shelf space for each drink.1. Calculate the contribution margin per case of each type of drink.2. A coworker of Miller's recommends that she maximize the shelf space devoted to those drinks with thehighest contribution margin per case. Do you agree with this recommendation? Explain briefly.3. What shelf-space allocation for the four drinks would you recommend for the Beach Comber? Showyour calculations.Required

Question
Asked Jan 21, 2020
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Relevant costs, contribution margin, product emphasis. The Beach Comber is a take-out food store at a popular beach resort. Sara Miller, owner of the Beach Comber, is deciding how much refrigerator space to devote to four different drinks. Pertinent data on these four drinks are as follows:

Natural Orange Juice
Cola
Lemonade
Punch
Selling price per case
$19.10
$20.25
$27.10
$39.50
Variable cost per case
$15.90
$14.40
$21.50
$29.80
Cases sold per foot of shelf space per day
10
24
25
22
Miller has a maximum front shelf space of 12 feet to devote to the four drinks. She wants a minimum of 1 foot
and a maximum of 6 feet of front shelf space for each drink.
1. Calculate the contribution margin per case of each type of drink.
2. A coworker of Miller's recommends that she maximize the shelf space devoted to those drinks with the
highest contribution margin per case. Do you agree with this recommendation? Explain briefly.
3. What shelf-space allocation for the four drinks would you recommend for the Beach Comber? Show
your calculations.
Required
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Natural Orange Juice Cola Lemonade Punch Selling price per case $19.10 $20.25 $27.10 $39.50 Variable cost per case $15.90 $14.40 $21.50 $29.80 Cases sold per foot of shelf space per day 10 24 25 22 Miller has a maximum front shelf space of 12 feet to devote to the four drinks. She wants a minimum of 1 foot and a maximum of 6 feet of front shelf space for each drink. 1. Calculate the contribution margin per case of each type of drink. 2. A coworker of Miller's recommends that she maximize the shelf space devoted to those drinks with the highest contribution margin per case. Do you agree with this recommendation? Explain briefly. 3. What shelf-space allocation for the four drinks would you recommend for the Beach Comber? Show your calculations. Required

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