Maple Grove Orchards is reviewing its pricing for fresh-squeezed cherry juice in half-gallon containers. The variable...
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Maple Grove Orchards is reviewing its pricing for fresh-squeezed cherry juice in half-gallon containers. The variable costs per container are $1.70. Based on a market study, the management has determined that the price per half-gallon should be between $2.70 and $3.20. From past experience, they know demand is price-sensitive. Considering prices in increments of 5 cents, what price should Maple Grove choose to maximize contribution margin? Prepare the retained earnings statement reflecting this decision.
Price per Half Gallon | Estimated Demand (Half-Gallon Units) |
$2.70 | 90,000 |
$2.75 | 87,000 |
$2.80 | 84,000 |
$2.85 | 81,000 |
$2.90 | 78,000 |
$2.95 | 75,000 |
$3.00 | 72,000 |
$3.05 | 69,000 |
$3.10 | 66,000 |
$3.15 | 63,000 |
$3.20 | 60,000 |
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