The Seafood Galore is a take-out food store at Banana Beach Resort. Mildred Sibanyoni, owner of Seafood Galore, is deciding how much refrigeration space to devote to four different cool drinks. Pertinent data on these four cool drinks are as follows:

Coke Fanta Schweppes Orange Juice

Selling price per case R18.75 R20.50

R27.75 R39.30

Variable cost per case R13.75 R15.60 R20.70 R30.40

Cases sold per m of shelf space per day 22 12 6 13

Mildred has a maximum front shelf space of 12 m to devote to the four cool drinks. She want a minimum of 1 m and a maximum of 6m of front shelf space for each cool drink.

Required:

4.1 Calculate the contribution margin per case of each type of cool drink.

4.2 A co-worker of Mildred recommends that she maximise the shelf space devoted to those cool drinks with the highest contribution margin per case. Evaluate this recommendation.

4.3 What shelf space allocation for the four cool drinks would you recommend for the Seafood Galore? Show your calculations.