Calculate the profit-maximizing price for roverplus brand

Reference no: EM13300487

Rover Plus is considering pricing a new roverplus labeled dog food. The company will buy the dog food from a company in India that packs the product with a roverplus label. Rover pays $6 for a 50 lb bag delivered to its store. The company also sells royal dog food which it purchases for $9 per 50 lb bag and sells for $16.99. They currently sell 25,000 bags of royal dog food per month, but that is expected to change. The company will continue to price the royal dog food at $16.99. The quantity of royal plus and royal dog food that will be sold are estimated at:

Price of Roverplus Quantity of Roverplus Quantity Royal

$8.99 35,000 11,000
$9.99 34,500 11,300
$10.99 34,000 11,500
$11.99 33,000 12,000
$12.99 30,000 13,000
$13.99 25,000 14,000
$14.99 15,000 15,000
$15.99 10,000 19,000
$16.99 5,000 21,000

A. Calculate the profit-maximizing price for the roverplus brand taking into account th effect of the sales of roverplus on sales of the royal dog food brand.

B. At the price calculated in part a, what is the incremental profit over the profit earned before the introduction of the roverplus branded dog food?

Reference no: EM13300487

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