Question
Oak Valley Farms is reviewing the pricing of its fresh-squeezed pomegranate juice in half-gallon containers. Variable costs per container are $1.85. Based on market study,
Oak Valley Farms is reviewing the pricing of its fresh-squeezed pomegranate juice in half-gallon containers. Variable costs per container are $1.85. Based on market study, management has set a price range of $2.85 to $3.35. Determine the price that maximizes contribution margin and prepare the retained earnings statement.
•Price per Half Gallon: $2.85; Estimated Demand: 89,000
•Price per Half Gallon: $2.90; Estimated Demand: 86,000
•Price per Half Gallon: $2.95; Estimated Demand: 83,000
•Price per Half Gallon: $3.00; Estimated Demand: 80,000
•Price per Half Gallon: $3.05; Estimated Demand: 77,000
•Price per Half Gallon: $3.10; Estimated Demand: 74,000
•Price per Half Gallon: $3.15; Estimated Demand: 71,000
•Price per Half Gallon: $3.20; Estimated Demand: 68,000
•Price per Half Gallon: $3.25; Estimated Demand: 65,000
•Price per Half Gallon: $3.30; Estimated Demand: 62,000
•Price per Half Gallon: $3.35; Estimated Demand: 59,000
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