Question 2

Highfield Juices sells large and small bottles of juice as shown in the table. Fixed cost is $100,000 per month.

Highfield is considering three alternative proposals:

(a) Do nothing and stay with the current production and marketing mix.

(b) Spend $15,000 per month on promoting Large juices. This is expected to increase Large juices by 15,000 but cannabalise 5,000 of this from Small juices.

(c) Redesign both products for $20,000 to achieve greater market acceptance and increase the volume of each product by 10,000. To help achieve this the price of Large juices will be increased by 20c and the price of the Small reduced by 10c.

Do you select proposal (a) or b) or (c)