XYZ brewery brews 3 types of beer: lager, ale, and stout. Stout Total 4.50 1.40 Selling price per bottle Ingredients Labor Variable Overhead Traceable fixed costs Common fixed costs Manufacturing capacity Tax rate Lager Ale $ 2.80 $ $ 1.49 $ $ 0.10 $ $ 0.05 $ $ 1,200 $ 3.00 $ 1.10 $ 0.10 $ 0.03 $ 1,400 $ 0.10 0.07 1,900 $ $ 2000 4,500 per month 3,000 per month 6000 bottles a month 28% 3000 2500 Note: manufacturing capacity is limited both per type and in total. Each beer needs specialized vats that limit how much beer can be brewed. The bottling operating is further limited by the bottling machine capacity, regardless of the type of beer bottled. Required: 1. Prepare a contribution margin income statement showing segment margin for each type of beer and after-tax income for the entire brewery assuming the following production and sales: Lager 2000 bottles Ale 2000 bottles 800 bottles Stout 2. Assuming the same production and sales as in requirement 1, Calculate the break-even point in number of bottles and sales (before taxes): a) for each beer separately b) for the brewery in total c) Compare your answers in a and b. Explain why the answers are the same or different. 3. Assuming the same production and sales as in requirement 1 what is the brewery's margin of safety in dollars? 4. The brewery is considering a marketing campaign for it's Stout beer. The marketing department prepared the following projections: Advertising cost Projected increase in Stout sales 500 300 bottles 1000 525 bottles 1500 700 bottles 2000 850 bottles Assuming that sales of Lager and Ale remain unaffected by this campaign, what level of marking spending would maximize brewery's after-tax income? Calculate new after-tax income. 5. XYZ is hosting a summer festival, so demand for beer is projected to significantly increase as shown below. How many of each type of beer should the brewery produce to maximize after-tax income? What would be the highest after-tax income brewery would achieve? Lager 4000 bottles Ale 3000 bottles Stout 1800 bottles 6. Continuing with question 5, the Brewery has an option to contract with another brewery to make Lager. What is the maximum price that XYZ would be willing to pay for each bottle of Lager in time for the summer festival and how many bottles would it order