Question
A small group of winemakers is considering setting up a winery specializing in blueberry wine. They plan to buy blueberries from local growers, Besides the
A small group of winemakers is considering setting up a winery specializing in blueberry wine. They plan to buy blueberries from local growers, Besides the blueberries that are needed for each bottle of blueberry wine, their only other variable cost is $1.50 per bottle of blueberry wine for packaging materials (bottle, cork, labels, box, ). They rent space and equipment at a larger local winery for $9,500 per year. There are no other fixed costs. They expect they can sell their wine to local wine shops for $12 per bottle and plan to produce 1,900 bottles per year. Per bottle of blueberry wine, what is the maximum price these winemakers should pay for blueberries to break even in the first year (assuming they indeed produce 1,900 bottles and assuming all other information given accurately represents reality as well)?
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