3. The Snack Shack is a take-out food store at Sokcho beach. Humayun, owner of the...
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3. The Snack Shack is a take-out food store at Sokcho beach. Humayun, owner of the Snack Shack, is deciding how much refrigerator space to devote to four different drinks. Pertinent data on these four drinks are as follows: Cola Lemonade Punch Natural Orange Juice Selling price per case $18.80 $20.75 $26.90 $39.30 Variable cost per case $13.80 $16.25 $20.10 $30.10 Cases sold per foot of shelf space per day 7 12 24 6 Ali has a maximum front shelf space of 12 feet to devote to the four drinks. He wants a minimum of 1 foot and a maximum of 6 feet of front shelf space for each drink. a) Calculate the contribution margin per case of each type of drink. b) Faruk recommends that Humayun maximizes the shelf space devoted to those drinks with the highest contribution margin per case. Do you agree with this recommendation? Explain briefly. c) What shelf-space allocation for the four drinks would you recommend for the Snack Shack? Show your calculations. 3. The Snack Shack is a take-out food store at Sokcho beach. Humayun, owner of the Snack Shack, is deciding how much refrigerator space to devote to four different drinks. Pertinent data on these four drinks are as follows: Cola Lemonade Punch Natural Orange Juice Selling price per case $18.80 $20.75 $26.90 $39.30 Variable cost per case $13.80 $16.25 $20.10 $30.10 Cases sold per foot of shelf space per day 7 12 24 6 Ali has a maximum front shelf space of 12 feet to devote to the four drinks. He wants a minimum of 1 foot and a maximum of 6 feet of front shelf space for each drink. a) Calculate the contribution margin per case of each type of drink. b) Faruk recommends that Humayun maximizes the shelf space devoted to those drinks with the highest contribution margin per case. Do you agree with this recommendation? Explain briefly. c) What shelf-space allocation for the four drinks would you recommend for the Snack Shack? Show your calculations.
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