Relevant costs, contribution margin, product emphasis. The Beach Comber is a takeout food store at a popular beach resort, fiusan $exton, owner of the Beach Comber, is deciding how much shelf 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 $19.80 $21.12 $29.04 $42.24 Variable costs per case $14.85 $16.72 $22.11 $33.22 Cases sold per metre ofshelf space per day 25 24 4 5 Sexton 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 Sexton’s recommends that she maximize 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 the Beach Comber?