Break-Even Sales Anheuser-Busch InBev Companies, Inc., reported the following op

Question

Break-Even Sales Anheuser-Busch InBev Companies, Inc., reported the following operating information for a recent year (in millions of dollars) Net sales Cost of goods sold Selling, general and administration $47,063 $18,756 12,999 $31,755 $15,308* Income from operations Before special items In addition, assume that Anheuser-Busch InBev sold 400 million barrels of beer during the year. Assume that variable costs were 75% of the cost of goods sold and 50% of selling, general and administration expenses. Assume that the remaining costs are fixed. For the following year, assume that Anheuser-Busch InBev expects pricing, variable costs per barrel, and fixed costs to remain constant, except that new distribution and general office facilities are expected to increase fixed costs by $300 million. When computing the cost per unit amounts for the break-even formula, round to two decimal places. If required, round your final answer to one decimal place. a. Compute the break-even number of barrels for the current year. million barrels b. Compute the anticipated break-even number of barrels for the following year. million barrels

Explanation / Answer

Distribution of variable cost and fixed cost :

Sale per unit = 47063/400 = 117.66

Break even point = 11188.50 / (117.66-51.42) = 168.9 million barrels

b) New break even point = 11488.50/66.24 = 173.4 million barrels

Variable Fixed Cost of goods sold 14067 4689 Selling, administrative expense 6499.50 6499.50 Total 20566.50 11188.50 Units 400 Variable cost per unit 51.42

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