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Sunrise Orchards is reevaluating its pricing strategy for fresh-squeezed pomegranate juice in half-gallon containers. Variable costs...

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Accounting

Sunrise Orchards is reevaluating its pricing strategy for fresh-squeezed pomegranate juice in half-gallon containers. Variable costs per container are $1.80. Management has determined that the price per half-gallon should be between $2.80 and $3.30. Considering only prices in increments of 5 cents, determine the optimal price to maximize contribution margin. Prepare the cost of goods sold statement for this pricing strategy.

Price per Half Gallon

Estimated Demand (Half-Gallon Units)

$2.80

95,000

$2.85

92,000

$2.90

89,000

$2.95

86,000

$3.00

83,000

$3.05

80,000

$3.10

77,000

$3.15

74,000

$3.20

71,000

$3.25

68,000

$3.30

65,000

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