Question

Data Table Mike's Beach Hut sells three types of cold drinks: 1. Right - Cola in 12-oz. cans for $1.50 per can 2. Right- Cola in 20-oz. bottles for $2.00 per bottle 3. Pretty Pop in 20-oz. bottles for $2.45 per bottle Mike's Beach Hut pays its suppliers: 1. $0.05 per 12-oz. can of Right- Cola 2. $0.30 per 20-oz. botle of Right Cola 3. $0.60 per 20-oz. bottle of Pretty Pop Mike's Beach Hut's monthly fixed costs include: Hut rental Refrigerator rental Mike's salary Total fixed costs 355 70 1,850 $2,275 Print Done

Answer 1

Ans : Mike's Beach Hut

Requirement 1

Constraining factor is Refrigerator's drink space which is limited to 105 linear feet

Each linear feet can store 6 12 -ounce can or 3 20- ounce bottle

Product mix analysis
Particulars		Right- cola 12-ounce Can	Right- cola 20-ounce Bottle	Pretty Pop 20-ounce Bottle
Sales price per unit		$ 1.50	$ 2.00	$ 2.45
Variable cost per unit		$ 0.05	$ 0.30	$ 0.60
Contribution margin per unit		$ 1.45	$ 1.70	$ 1.85
Unit per linear feet		$ 6.00	$ 3.00	$ 3.00
Contribution margin per linear feet		$ 8.70	$ 5.10	$ 5.55
Rank as per contribution per linear feet		1	3	2

As per the above analysis the contribution per linear feet of drink space in higher in Right - Cola 12- ounce can so it is to be stocked in the refrigerator to maximize the profit

Requirement 2) If there is Limit over allocation of refrigerator drinks space up to 70 linear feet

Then the product mix as follows

First stock Right - Cola 12- ounce can space allotted is 70 linear feet

Second stock Pretty Pop 20-ounce Bottle space allotted is 70 linear feet

Third Stock Right- cola 20-ounce Bottle space allotted is 10 linear feet

Unit of each product will be sold each day
Product		Linear feet allotted	Unit per Linear Feet	Number of units
Right- cola 12-ounce Can		70	6	420	Cans
Right- cola 20-ounce Bottle		10	3	30	Bottles
Pretty Pop 20-ounce Bottle		70	3	210	Bottles