Question
Soda Company makes three products (Orange Soda, Cream Soda, and Cherry Soda), all of which use a very rare ingredient called Nutra Sugar. Soda Company
Soda Company makes three products (Orange Soda, Cream Soda, and Cherry Soda), all of which use a very rare ingredient called Nutra Sugar. Soda Company can purchase only 500 ounces of Nutra Sugar per month from a South American source. Below are data for the three products:
Orange
Cream
Cherry
Unit selling price
$40
$32
$50
Unit variable cost
10
20
30
Unit contribution margin
$30
$12
$20
Nutra Sugar (ounces per unit)
10
15
20
How should Soda Company allocate the 500 ounces of Nutra Sugar, assuming it can sell unlimited quantities of all three produces?
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