1. Ignore any current plans. Using last year's actual data and sales mix, how many total cases would David need to sell in order to earn $50,000 after tax? How many of these cases would be Ocotillo Amber Pilsner? 2. In question one, you identified the total number of cases the company needs to sell to earn $50,000 after tax (and how many cases of Ocotillo Amber Pilsner). Assume you did the calculations in question one correctly. However, before discussing your solution with the owner, identify and explain at least three issues related to your analysis and the assumptions employed in your analysis in question one (discuss each concern; what it is and why it is a concern; do NOT just question general facts of the case such as why we are charging a certain price for one product or how we can reduce direct material cost). (Hint: think back to the CVP assumptions and consider how those assumptions might create potential issues with your analysis.) 3. Ignore the desire to earn $50,000 after tax and refer to the original data. David has a few options regarding Sedona Stout pricing: a) keep the sales price the same (no change), b) increase the sales price or 3) decrease the sales price. What would you recommend he do and why? Provide both quantitative and qualitative analysis. (Hint: think about what it means to raise or lower the selling price from the customer's perspective - what might it signal? Does the sales price impact volume? What might a change in volume mean from a production standpoint?) 4. Next, ignoring the Sedona Stout information, consider David's question regarding what product line the sales people should emphasize. David wants the sales efforts to maximize profits and utilize the company's current capacity. What would you tell him? Explain your rationale. (Hint: Are there any constraints? What product line would you emphasize when there are no constraints and which would you emphasize given the constraint faced by AMI?) 5. Analyzing the sales forecast of root beer, what preliminary course of action do you recommend (in- house or out-source production) and why? Support your recommendation with numbers. (Hint: you may want to calculate metrics from the CVP chapter like breakeven, contribution margin ration, operating leverage, and point of indifference for each of your options, when analyzing your options.) 6. What other issues, concerns or further analysis do you want to discuss with David? Your issues/concerns could pertain to whether AMI should add root beer as a new product line and, if so, the issues concerns of producing in-house versus the out-sourcing. The issues/concerns should include both numeric and non-numeric issues. Do NOT just bullet point all kinds of items; instead, talk about specifics and how they relate to this company/situation and why it is important to consider. (Hint: think about qualitative issues related to the make vs. buy decision as well as the decision to add root beer as a new product line.)