Exercise on evaluating alternatives
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Exercise on evaluating alternatives
A Brewery Company is realizing beer Type A.
It is now considering the possibility of introducing a new product line: Beer Type B.
Here below you can find some data about the two types of products:
| c1 | c2 | c3 |
|---|---|---|
| Beer Type A | Beer Type B | |
| Price (€/u) | 1,10 €/u | 1,50 €/u |
| Variable cost (€/u) | 0,85 €/u | 0,90 €/u |
| Fixed cost (€) | 25 € | 25 € |
| Quantity (u) | 80 u | 50 u |
The production of beer Type B implies an increasing marketing effort of 20 €.
Is it convenient to produce beer Type B?