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Returning to our running case for Shannon$$s Brewery introduced in the market share exercise, assume that Shannon$$s is considering the introduction of a new craft beer called Irish Stout that will be derived from its award$-$winning Irish Red. Initially, Irish Stout will only be sold $$on$-$premise$$ at the brewery. Currently, pints of Irish Red consumed on$-$premise sell for $$5\mathrm{.}00$ per pint with unit variable costs of approximately $$2\mathrm{.}75$ per pint. Variable costs are predominantly comprised of the costs of ingredients and utilities that directly affect the brewing process. The new craft beer will be positioned at a slightly higher price, $$5\mathrm{.}25$ per pint, and its unit variable costs will be about $$3\mathrm{.}25$ due to the higher cost of some ingredients. The relevant price, cost, and margin data are below.

Irish Red

Irish Stout

Price

$ $5\mathrm{.}00$

$ $5\mathrm{.}25$

Unit Variable Costs

$ $2\mathrm{.}75$

$ $3\mathrm{.}25$

Unit Contribution

$ $2\mathrm{.}25$

$ $2\mathrm{.}00$

Flag question: Question $1$

Question $110$ pts

Shannon$$s Irish Red averages on premise sales of $1,200$ pints per month. What is the anticipated profit $($contribution dollars$)$ per month associated with sales of Shannon$$s Irish Red assuming that the Irish Stout is not introduced. Express your answer to the nearest dollar. Do not include the dollar sign.

Flag question: Question $2$

Question $210$ pts

Given Irish Red sales and cost data from the last question, assume that Shannon$$s estimates that the sales of the new Irish Stout will be about $250$ pints per month, but $25\%$ of these sales will be cannibalized from sales of Shannon$$s Irish Red. Compute the total combined increase or decrease $($incremental change$)$ in contribution dollars for both Irish Red and Irish Stout expected with cannibalization. Express your answer to the nearest dollar. Do not include the dollar sign.

Flag question: Question $3$

Question $310$ pts

Let$$s stretch a little on this one. Assume Shannon$$s Irish Red sells $1,000$ pints per month in the absence of any cannibalization. Assume also that the new Irish Stout will sell $500$ pints per month. The relevant price and cost data are:

Irish Red

Irish Stout

Price

$ $5\mathrm{.}00$

$ $5\mathrm{.}09$

Unit Variable Costs

$ $2\mathrm{.}75$

$ $3\mathrm{.}25$

What will be the maximum percentage cannibalization that can exist before the overall change in contribution dollars becomes negative? Express your answer in percentage form to the nearest percent e$.$g$.$; $99\mathrm{.}49\%$ rounds down to$99\%$; $99\mathrm{.}50\%$ rounds up to $100\%.$ Do not include the $\%$ symbol.

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