# A brewer's average cost per keg of craft beer is

A brewer's average cost per keg of craft beer is \$60, and a keg sells to distributors for \$90. The distributor then resells the keg to a bar for \$120. Each keg serves more than one hundred 14.5-ounce glasses, the amount typically poured into a 16-ounce glass at a bar to accommodate a foam head. A bar’s cost per glass of craft beer poured is \$0.88 per glass. The standard in the bar industry is to have 20 percent liquor cost, meaning 20 percent of the price to consumers represents the bar’s cost of goods sold, leaving 80 percent for the bar’s gross margin

1). Calculate the price at which a bar will sell one 14.5-ounce glass of craft beer at a gross margin of 80 percent and what is the bar’s dollar markup on a 14.5-ounce glass of craft beer?

2). What is the bar’s markup (as a percentage) on its cost for a 14.5-ounce glass of craft beer? Show your calculations.

3). Determine the brewer’s cost per 14.5-ounce serving (one glass). HINT: Use ratios to do this calculation and show how you do it

4). What gross margin percentage would a brewer realize if it opened a brewpub or taproom and sold a 14.5-ounce glass of beer at the same price as that at which bars sell it per your calculation in (c)? Show your calculations

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