Monteagudo-Playa SA is a take-away food store at a popular beach resort. Consuelo Herreros, owner of Monteagudo-Playa, is deciding how much refrigerator space to devote to four different drinks. Pertinent data on these four drinks are as follows:

Consuelo has a maximum front shelf-space of 12 metres to devote to the four drinks. She wants a minimum of 1 metre and a maximum of 6 metres of front shelf-space for each drink.
Required
1. What is the contribution margin per case of each type of drink?
2. A co-worker of Consuelo's recommends that she maximise 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 Monteagudo- Playa?

Transcribed Image Text:

Natural Cola Lemonade Punch orange juice Selling price per case Variable costs per case Cases sold per metre 108.00 115.20 E158.40 230.40 €81.00 є 91.20 €120.60 €181.20 of shelf-space per day 25 24 4