Anheuser-Busch InBev Companies, Inc., reported the following operating informati
ID: 2517039 • Letter: A
Question
Anheuser-Busch InBev Companies, Inc., reported the following operating information for a recent year (in millions of dollars):
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 $47,063 $18,756 12,999 $31,755 $15,308* Selling, general and administration 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 ere 75 6 of the cost of oo 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 bl, 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 barrelsExplanation / Answer
(a) Break-even sales (barrels) for the current year = 168.9 Barrels
Selling price per barrel = $47,063 / 400 = 117.66 per barrels
Variable cost per barrel = [($18756 * 0.75) + (12999 * 0.50) ] / 400
= 20566.50 Million / 400
= $51.42 per barrel
Fixed Cost = [($18756 * 0.25) + (12999 * 0.50) = $11188.50 Million
Break-even sales (barrels) for the current year = Fixed Costs / Contribution per barrel
= $11188.50 Million / ($117.66 - $51.42 )
= $11188.50 Million / $66.24
= 168.9 Barrels
(b) Anticipated break-even sales (barrels) for the following year =173.4Barrels
= ($11188.50 + $300) / ($117.66 - $51.42 )
= $11488.50 / $66.24
= 173.4 Barrels