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

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Accounting

Sunny Meadows is reevaluating the pricing of its fresh-squeezed orange juice in half-gallon containers. Variable costs per container are $1.60. Based on market analysis, management has set a price range of $2.60 to $3.10. Identify the price that maximizes contribution margin and prepare a detailed income statement.

Price per Half Gallon

Estimated Demand (Half-Gallon Units)

$2.60

97,000

$2.65

94,000

$2.70

91,000

$2.75

88,000

$2.80

85,000

$2.85

82,000

$2.90

79,000

$2.95

76,000

$3.00

73,000

$3.05

70,000

$3.10

67,000

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