Portland Brewing Company is a small craft brewer that produces five varieties of beer. The...
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Accounting
Portland Brewing Company is a small craft brewer that produces five varieties of beer. The beers sell for $8 per six-pack, and the company currently sells 10,000 six-packs per month.
The company is considering producing a seasonal beer that will be sold in October, November, and December. The company estimates that at $6 per six-pack, the company will sell 2,000 six-packs. At $7 per six-pack, sales will be 1,000 six-packs. The company also estimates that sales of the seasonal beer will eat into sales of its standard items. Specifically, for every 500 six-packs of the seasonal beer that are sold, 200 six-packs of the standard varieties will not be sold. The variable production costs of all beers is $1.20 per six-pack.
Required
Calculate the incremental profit associated with selling the seasonal beer at $6 per six-pack.
A
$4,160
B
$3,800
C
$3,840
D
$3,480
E
$3,080
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