4. Beach Bums is a popular beachside store. Becky, owner of the Beach Bums, is deciding...

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4. Beach Bums is a popular beachside store. Becky, owner of the Beach Bums, is deciding how much refrigerator space to devote to four different drinks. Pertinent data on these four drinks are as follows: Coke Lemonade Water Selling Price per Case $20 $22 $30 Variable Cost per Case $14 $17 $21 Cases Sold per Ft of Shelf Space per Day 10 25 5 Apple Juice $40 $30 20 Becky 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. a. Calculate the contribution margin of each type of drink. [B6] b. Becky's employee 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 and show your calculations. [B7] c. If there were unlimited shelf space and unlimited demand for all four drinks, which of the drinks would you choose to sell? [B8] d. Given the constraint on shelf space, what shelf-space allocation for the four drinks would you recommend for the Beach Bums? Show your calculations. [A2] 4. Beach Bums is a popular beachside store. Becky, owner of the Beach Bums, is deciding how much refrigerator space to devote to four different drinks. Pertinent data on these four drinks are as follows: Coke Lemonade Water Selling Price per Case $20 $22 $30 Variable Cost per Case $14 $17 $21 Cases Sold per Ft of Shelf Space per Day 10 25 5 Apple Juice $40 $30 20 Becky 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. a. Calculate the contribution margin of each type of drink. [B6] b. Becky's employee 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 and show your calculations. [B7] c. If there were unlimited shelf space and unlimited demand for all four drinks, which of the drinks would you choose to sell? [B8] d. Given the constraint on shelf space, what shelf-space allocation for the four drinks would you recommend for the Beach Bums? Show your calculations. [A2]

Answer rating: 100% (QA)

a Contribution Margin of Each Drink Coke Selling Price per Case 20 Variable Cost per Case 14 Contribution Margin per Case Selling Price per Case Variable Cost per Case Contribution Margin per Case 20 ... View the full answer