Wave Crave is a takeaway food shop in a popular beach resort.Juliaa Jones, owner of Wave Crave
Question:
Wave Crave is a takeaway food shop in a popular beach resort. Juliaa Jones, owner of Wave Crave
deciding how much refrigerator space to allocate to four different drinks. Valid data on these four beverages are as follows:
Jones
It has a maximum of 12 feet of front shelf space to divide into four drinks. Requires a minimum of 1 foot and a maximum of 6 feet of front shelf space per beverage. Read requirements
Natural | ||||
Kola | Lemonade | Fist | Orange juice | |
Selling price per case | 19.10 dollars | $20.25 | $27.30 | $39.40 |
variable cost per case | 14,00 $ | $16.40 | $20.50 | 30.50 dollars |
Number of cases sold per shelf space per day | 25 | 4 | 6 | 23 |
.
Condition 1. Calculate the contribution margin per case for each beverage type.
Natural | ||||
Kola | Lemonade | Fist | Orange juice | |
Selling price per case | 19.10 dollars | $20.25 | $27.30 | $39.40 |
variable cost per case | 14.00 | 16.40 | 20.50 | 30.50 |
Contribution per case |
Requirement 2. A colleague
Jones Jones'a
recommends maximizing shelf space for beverages with the highest contribution margin per case. Do you agree with this advice? Please explain briefly.
A.
This suggestion doesn't make sense. The company must allocate equal shelf space to each product so that the customer has ample choice.
B.
This suggestion doesn't make sense. He cannot accept that the company has limited shelf space and therefore wants to maximize the contribution margin for each square foot of shelf space.
C.
This suggestion makes sense. It will enable the company to maximize its contribution margin.
Condition 3. What shelf space allocation would you recommend for the four drinks?
Wave RequestWave Request?
Show your calculations.
Start by calculating the amount that should be used to determine the allocation. (Round your answers to the nearest penny.)
Natural | ||||
Kola | Lemonade | Fist | Orange juice | |
Allocate shelf space to each product and show the effect it will have on the product.
Wave CraveWave Crave's
operations. (Round your answers to the nearest penny.)
Total | |||
feet | per foot | ||
shelf space | shelf space | daily | |
Kola | |||
Lemonade | |||
Fist | |||
Natural Orange Juice | |||
Total |
Cost Accounting A Managerial Emphasis
ISBN: 978-0131495388
12th edition
Authors: Charles T. Horngren, Srikant M. Datar, George Foster