Q5. Bear Brewery, based in Langley, British Columbia, specializes in craft beer. The brewery produces two ales:
Amber and Dubbel.
Bear Brewery aligns its ale prices with competitors. The brewery sells its Amber for $14.95 per case and its Dubbel for $15.65 per case. The per case variable costs for Amber include $3.50 in raw materials, $0.75 in packaging, $1.20 in manufacturing overhead and $0.55 in shipping. Dubbel's per case variable costs are $3.85 in raw materials, $0.75 in packaging, $1.95 in manufacturing overhead and $0.75 in shipping. Fixed costs include office lease of $25,000, office supplies of $4,500 and marketing expenses of $6,000.
Make a spreadsheet that provides the income position of the brewery for the upcoming year. The brewery projects demand to be 10,000 cases for Amber, and 8,000 cases for Dubbel. Assuming a unit to unit sale, what is a more profitable beer for Bear Brewery? Determine the break-even for each beer, assuming that fixed expenses are allocated as follows: 45% for Amber and 55% for Dubbel. Provide a chart showing the break-even point for each beer.
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