Reference no: EM131812549

Portland Brewing Company is a small craft brewer that produces five standard varieties of beer. The beers sell for $6 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 1,000 six- packs of the seasonal beer that are sold, 300 six-packs of the standard varieties will not be sold. The variable production costs of all beers is $1.20 per six-pack. Calculate the incremental profit associated with the two selling prices under consideration for the seasonal beer (i.e., $6 and $7 per six-pack). Should Portland Brewing produce the beer and, if so, what price should the company charge?