The Snack Shack is a take-out food store at a popular beach resort. Susan Sexton, 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:

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. Calculate the contribution margin
 per case of each type of drink.
2. A coworker of Sexton’s 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 briefly.
3. What shelf-space allocation for the four drinks would you recommend for the Snack Shack? Show yourcalculations.
 

Transcribed Image Text:

Cola Lemonade Punch Natural Orange Juice $18.80 $20.75 $26.90 $39.30 Selling price per case Variable cost per case Cases sold per foot of shelf space per day $13.80 $16.25 $20.10 $30.10 12 24 6 Cola Lemonade Punch Natural Orange Juice $18.80 $20.75 $26.90 $39.30 Selling price per case Variable cost per case Cases sold per foot of shelf space per day $13.80 $16.25 $20.10 $30.10 12 24 6

Answer rating: 100% (QA)

Complete solution is given below 1 Contribution margin Cola Lemonade Punch Natural orange juice Selling price 188 2075 269 393 less Variable cost 138 ... View the full answer