Comprehensive Course Project Case Scenario Scenario Grizzly Bear Winery (GBW) is a small winery in Portland, OR. Kerry Smith is the CEO and President of the Board of Directors, which is made-up of local business owners and professionals. In 2020, GBW had a net loss of ($3,914). The company pays a 21% corporate tax rate in the year's when it has a profit. GBW has a relationship with a local vineyard owner who grows two types of wine grapes: a Cabernet and a generic red grape. Last year GBW bought 130,000 lbs. of Cabernet grapes, and 350,000 lbs. of generic grapes. The vineyard can guarantee this amount every year. After the grapes are harvested, they are brought to the winery for processing into wine. The Cabernet wine is fermented in oak barrels. The generic wine is fermented in a stainless-steel tank. GBW bottles three wines: Cabernet Estate, a Blended wine, and a Red Table wine. The Cabernet Estate varietal contains only Cabernet grapes and requires 4 lbs of Cabernet grapes. The sales price is $23.50/bottle. The blended wine is made by combining 1 lb of Cabernet grapes and 3 lbs of generic grapes. The different grapes are fermented separately and blended before bottling. The sales price is $17/bottle. The Table wine is made from only generic grapes and requires 4 lbs of grapes. The sales price is $7/bottle. All three wines are packaged at the GBW facility. Current year Sales and unit prices are shown below. Demand for each product is expected to grow significantly, as shown. Table 1: Sales Data Price per bottle # of bottles sold Expected Demand (next year) Estate Blend Table $23.50 20,000 42,000 $17.00 $7.00 45,200 80,000 50,000 86,000 115,200 208,000 Since demand is strong, and the company sells all the wine it produces, the CEO suspects that one of the wine varietals is not profitable and is therefore causing the company to be in the red. She needs your help in determining if any of the products are dragging down the profit margin, and if so, what should be done about it. She would like to know if she should cut pay for some employees, raise prices, change the sales mix, or drop a product.