CH14-Q5A)

Sheridan shucks and packs oysters and sells them on a wholesale basis to fine restaurants across the province. The income statement for last year follows: Revenue (2,000 cases) $210,000 Expenses: Wages for pickers, shuckers, and packers $104,000 Packing materials 22,000 Rent and insurance 26,000 Administration and selling 46,000 198,000 Pretax Income $12,000 Pickers, shuckers, and packers are employed on an hourly basis and can be laid off whenever necessary. Salespeople merely deliver the product and so are paid on a salaried basis. Linda Hanson, manager of Sheridan, believes that a price increase of 10% would result in a 15% decrease in sales. The Rake and Tongs Restaurant is providing dinner for a meeting of the Pickers, Shuckers, and Packers Union in Prince Edward Island. Rake and Tongs offered to pay Sheridan $70 a case for 300 cases of oysters. This sale would not affect Sheridan's regular sales. (a) a Ignoring the Rake and Tongs offer, estimate the profit-maximizing price for Sheridan. (Round entry to whole amounts, eg. 5725. Round elasticity to 3 decimal places, e.g. 1.525 for your calculations.) Price per case $