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

Answer rating: 100% (QA)

Lets break down these questions one by one Requirement 1 Calculate the contribution margin per case ... View the full answer