Reference no: EM133127201

Question - Neil brews two types of beer, Barley Wine and Oatmeal Stouts. He began selling his brew in litre bottles in January 2022. The popular Barley Wine sells for $33 per litre and Oatmeal Stouts for $25.75 per litre. Neil's per unit variable costs for Barley Wine include $7.05 in raw materials, $0.50 in packaging, $1.05 in manufacturing overhead, and $0.25 in shipping. The per unit variable costs for Oatmeal Stouts include $6.75 in raw materials, $0.50 in packaging, $1.25 in manufacturing overhead, and $0.25 in shipping. Neil's fixed costs include office rent of $28,000, office supplies of $2,500, and marketing expenses of $5,000. Create a spreadsheet with the following:

1. Lay out all inputs and calculate the income position of Neil's business should he sell 1200 litres of Barley Wine and 1200 litres of Oatmeal Stouts, assuming that fixed expenses are divided equally between the two beers.

2. Assume a unit-to-unit sale, what is a more profitable brew for Neil?

3. Determine the contribution margin and break-even for each beer.

4. Provide a chart showing the break-even point for each brew.