Relevant costs, contribution margin, product emphasis. The Beach Comber is a take-out food store at a popular beach resort. Susan Sexton, 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:

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Sexton 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. Compute the contribution margin per case of each type of drink.

2. A co-worker of Sexton’s recommends that she maximize the shelf space devoted to those drinks with the highest contribution margin per case. Evaluate this recommendation.

3. What shelf-space allocation for the four drinks would you recommend for the Beach Comber? Show your calculations.

Natural Orange Punch Cola Lemonade $20.00 $16.10 24 Juice $39.20 Selling price per case Variable cost per case Cases sold per foot of shelf space per day $27.10 $20.70 $18.80 $30.20 $14.20 25