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Sunny Meadows is reevaluating its pricing strategy for fresh-squeezed orange juice in half-gallon containers. Variable costs...

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Accounting

Sunny Meadows is reevaluating its pricing strategy for fresh-squeezed orange juice in half-gallon containers. Variable costs per container are $1.50. Management has estimated the demand for various prices between $2.50 and $3.00. Identify the price that maximizes contribution margin and prepare a retained earnings statement reflecting this decision.

Price per Half Gallon

Estimated Demand (Half-Gallon Units)

$2.50

100,000

$2.55

97,500

$2.60

95,000

$2.65

92,500

$2.70

90,000

$2.75

87,500

$2.80

85,000

$2.85

82,500

$2.90

80,000

$2.95

77,500

$3.00

75,000

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