Question

Ginnie has observed that her signature item, the Satisfying Smoothie, is very popular with the late evening crowd at the gym, but it is not so popular with the early crowd. The early and late crowds have only slightly different preferences for her Hydration Power Drink. The gym has a very large clientele, and Ginnie can’t always tell who has the late-crowd preference and who has the early-crowd preference.

Answer 1

Contribution is the difference between sales and variable cost.

Hydration power drink

contribution - revenue

High =  7-1 = 6

Low  =  6-1 = 5,

Satisfying smoothie,

High  = 10-4 = 6

Low   = 5-4 = 1

Hydration power drink bundle will be maximized profit.

What is maximized profit?

Profit maximization is a process business firms undergo to ensure the best output and price levels are achieved in order to maximize its returns.

Influential factors such as sale price, production cost and output levels are adjusted by the firm as a way of realizing its profit goals.

Learn more about maximized profit here,

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