Willow Creek Orchards is reassessing the pricing of its fresh-squeezed grapefruit juice in half-gallon containers. Variable costs per container are $1.65. Based on market research, management has set a price range of $2.65 to $3.15. Determine the price that maximizes contribution margin and prepare the statement of cash flows.
•Price per Half Gallon: $2.65; Estimated Demand: 92,000
•Price per Half Gallon: $2.70; Estimated Demand: 89,000
•Price per Half Gallon: $2.75; Estimated Demand: 86,000
•Price per Half Gallon: $2.80; Estimated Demand: 83,000
•Price per Half Gallon: $2.85; Estimated Demand: 80,000
•Price per Half Gallon: $2.90; Estimated Demand: 77,000
•Price per Half Gallon: $2.95; Estimated Demand: 74,000
•Price per Half Gallon: $3.00; Estimated Demand: 71,000
•Price per Half Gallon: $3.05; Estimated Demand: 68,000
•Price per Half Gallon: $3.10; Estimated Demand: 65,000
•Price per Half Gallon: $3.15; Estimated Demand: 62,000