Okay, here we go. If the cup was nothing but Ice then once it melted it would be less volume of the ice but since the cup is already filled with coke, water has different displacement and density of ice.

Ice is the opposite of just about everything else in the world. When the temp decreases its density decreases therefor it's displacement isn't as great as just water. Thats why less volume of water will displace more then a greater volume of ice.

Chemistry 101.