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Valley Orchards is reviewing the pricing of its fresh-squeezed cranberry juice in half-gallon containers. Variable costs...

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Accounting

Valley Orchards is reviewing the pricing of its fresh-squeezed cranberry juice in half-gallon containers. Variable costs per container are $1.75. Management is evaluating prices between $2.75 and $3.25. Determine the optimal price to maximize contribution margin and prepare a cash flow statement.

Price per Half Gallon

Estimated Demand (Half-Gallon Units)

$2.75

98,000

$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

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