ABC company reported the following operating information for arecent year(in mil
ID: 2446375 • Letter: A
Question
ABC company reported the following operating information for arecent year(in millionsths:L Netsales 14,935 Cost of goodssold 8,983 Marketing anddistribution 2590 11,590 Income fromoperations 3,362 In addition ABC company sold 136 million barrels of productduring the year. Assume that variable costs were 70% ofthe cost of goods sold and 45% of margeting anddistrubution expenses. Assume that the remaining costsare fixed. For the following year, assume that ABC Companyexpects pricing, variable costs per barrel, and fixed costs toremain constant, except that new distrubution and general officefacilities are expected to increase fixed costs by $133million. Round to the nearest cent. A. Compute the break-even sales(barrels) for the currentyear. B. Compute the anticipated break even sales(barrels) for thefollowing year. ABC company reported the following operating information for arecent year(in millionsths:L Netsales 14,935 Cost of goodssold 8,983 Marketing anddistribution 2590 11,590 Income fromoperations 3,362 In addition ABC company sold 136 million barrels of productduring the year. Assume that variable costs were 70% ofthe cost of goods sold and 45% of margeting anddistrubution expenses. Assume that the remaining costsare fixed. For the following year, assume that ABC Companyexpects pricing, variable costs per barrel, and fixed costs toremain constant, except that new distrubution and general officefacilities are expected to increase fixed costs by $133million. Round to the nearest cent. A. Compute the break-even sales(barrels) for the currentyear. B. Compute the anticipated break even sales(barrels) for thefollowing year.Explanation / Answer
Whoa its been a while since i was in manegerial, but i'll tryto help you out. Total Per Unit (Divide Total by136) Variable Per Unit Fixed Expenses Net sales 14935 109.82 COGS -8983 -66.05 -46.24 (-66.05*.7) -2694.9(.3*Cogs) Marketing andDistribution -2590 -19.04 -10.47 (-19.04*.45) -1424.5 (.55*MnD) Total 3362 24.72 -54.81 -4119.40 -10.47 (-19.04*.45)I like to work per unit, it is much smaller numbers. Pu=per unit Sales (PU) 109.82 Variable (PU) -54.81 CM Ratio = 55.01/109.82 Contribution Margin 55.01 0.501 Fixed Expenses -4119.4 A) Break Even Sales Dollars = Fixed Expenses / CMratio = 4119.4 / .501 = $8222.36 to get it in units, divide by $109.82 (sales price perunit) to get 74.87 million units B) do the exact same thing except add 136 to the fixed costtotal BE = 4255.4 / .501 = $ 8493.81 / 109.82 fora grand total of 77.34 million units Hope I could help i hated accounting when i was in college,but oddly enough it was the class I always did best in. Hope I could help i hated accounting when i was in college,but oddly enough it was the class I always did best in. Total Per Unit (Divide Total by136) Variable Per Unit Fixed Expenses Net sales 14935 109.82 COGS -8983 -66.05 -46.24 (-66.05*.7) -2694.9(.3*Cogs) Marketing andDistribution -2590 -19.04 -10.47 (-19.04*.45) -1424.5 (.55*MnD) Total 3362 24.72 -54.81 -4119.40