The Seafood Galore is a take-out food store at Banana Beach Resort. Mildred Sibanyoni, owner of Seafood
Question:
The Seafood Galore is a take-out food store at Banana Beach Resort. Mildred Sibanyoni, owner of Seafood Galore, is deciding how much refrigeration space to devote to four different cool drinks. Pertinent data on these four cool drinks are as follows:
Coke
Fanta
Schweppes
Orange Juice
Selling price per case
R18.75
R20.50
R27.75
R39.30
Variable cost per case
R13.75
R15.60
R20.70
R30.40
Cases sold per m² of shelf space per day
22
12
6
13
Mildred has a maximum front shelf space of 12 m² to devote to the four cool drinks. She want a minimum of 1 m² and a maximum of 6m² of front shelf space for each cool drink.
Required:
4.1 Calculate the contribution margin per case of each type of cool drink.
4.2 A co-worker of Mildred recommends that she maximise the shelf space devoted to those cool drinks with the highest contribution margin per case. Evaluate this recommendation.
4.3 What shelf space allocation for the four cool drinks would you recommend for the Seafood Galore? Show your calculations.
Expert Answer:
Answer 41 Coke Fanta Schweppes Orange Juice Selling price 1875 2050 2775 3930 Deduct variable cost p... View the full answer
