Relevant costs, contribution margin, product emphasis. (20-25 minutes) 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: hju\

REQUIRED 1. What is the contribution margin per case of each type of drink?

2. Aco-worker of Herreros’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?

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NATURAL COLA LEMONADE PUNCH ORANGE JUICE Selling price per case Variable costs per case Pta 18,000 Pta 19,200 Pta 26,400 Pta 38,400 Pta 13,500 Pta 15,200 Pta 20,100 Pta 30,200 Cases sold per metre of shelf space per day 25 24 4 5 Herreros 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.