Crooked Creek Wines operates a cellar door venue in which customers can sample and purchase wines. The average revenue per day is $750 , variable cost per day is $250 and annual fixed costs for the cellar door operations is $95,000. Assume 365 operating days. What is the operating profit (loss) fo r cellar door operations per year?

As CVP analysis allows us to play what if games with the information, calculate the operating profit under each of the following conditions:

a) Reduction in cellar door operations to 280 days per annum

b) Increase in the average daily revenue to $800

c) Increase in the average daily revenue to $800 AND decrease variable costs to $225 AND reduce the operating days to 290.

Once all of the options have been considered, which of the options would you recommend to the management o f Crooked Creek Wines and why?