Question

Dave operates his business out of a small storefront, so he does not have a lot of shelf space for his products. Recently, some additional shelf space became available. Dave is trying to decide which of his products to put in that space. Product 1 has a unit contribution margin of $500 and a contribution margin per square foot of space of $2,000. Product 2 has a unit contribution margin of $600 and a contribution margin per square foot of space of $1,200. Based on this information alone, what product would be best for the additional shelf space?

Answer 1

Product 1 will satisfied the given requirement of shelf space

Step-by-step explanation:

given data:

product 1

"contribution margin/ft^2 of space" - $2,000.

product 2

"contribution margin/ft^2 of space" - $1,200.

on the basis of additional shelf space, contribution margin per square foot of space is a deciding criteria therefore product 1 has higher contribution margin per square foot

hence, Product 1 will satisfied the given requirement of space