A Brewer Is Launching a New Product: Brewed Ginger Ale

question 105

Multiple Choice

A brewer is launching a new product: brewed ginger ale with a low alcohol content. The brewer plans to spend promoting this product this year, which is expected to expand the sales of this product to this year and next year. They do expect there will be loss of sales of this year and next year in their other products as customers switch to drinking the new ginger ale. The gross profit margin for the new ginger ale is 40%, the gross profit margin of all of the brewer's other products is 30%, and the brewer's marginal corporate tax rate is 35%. What are incremental earnings arising from the promotional campaign this year?

• A) $1.625 million
• B) $1.26 million
• C) $2.11 million
• D) $4.40 million

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Definitions:

Team Dynamics

The unconscious, psychological forces that influence the direction of a team’s behavior and performance.

Consideration Skills

The ability to show thoughtfulness and care towards others' feelings, needs, and circumstances within interpersonal interactions.

First-Line Supervisor

A managerial position that serves as the initial level of management, directly overseeing and managing the work of entry-level or operational employees.

Productivity

The measure of efficiency of a person, machine, factory, or system in converting inputs into useful outputs.