Question
Hilltop Vineyards is reviewing the pricing of its half-gallon grape juice. Variable costs per half-gallon container of grape juice are $1.80. Management has decided that
Hilltop Vineyards is reviewing the pricing of its half-gallon grape juice. Variable costs per half-gallon container of grape juice are $1.80. Management has decided that the price per half-gallon should be between $2.70 and $3.20. Demand estimates for various prices are given. Identify the optimal price to maximize contribution margin and prepare a balance sheet reflecting this pricing strategy.
•Price per Half Gallon: $2.70; Estimated Demand: 90,000
•Price per Half Gallon: $2.75; Estimated Demand: 87,500
•Price per Half Gallon: $2.80; Estimated Demand: 85,000
•Price per Half Gallon: $2.85; Estimated Demand: 82,500
•Price per Half Gallon: $2.90; Estimated Demand: 80,000
•Price per Half Gallon: $2.95; Estimated Demand: 77,500
•Price per Half Gallon: $3.00; Estimated Demand: 75,000
•Price per Half Gallon: $3.05; Estimated Demand: 72,500
•Price per Half Gallon: $3.10; Estimated Demand: 70,000
•Price per Half Gallon: $3.15; Estimated Demand: 67,500
•Price per Half Gallon: $3.20; Estimated Demand: 65,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started