Break-Even Sales Anheuser-Busch InBev Companies, Inc., reported the following op
ID: 2517831 • Letter: B
Question
Break-Even Sales
Anheuser-Busch InBev Companies, Inc., reported the following operating information for a recent year:
In addition, assume that Anheuser-Busch InBev sold 34,000 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 $17,300.
a. Compute the break-even number of barrels for the current year. Round to the nearest whole barrel.
barrels
b. Compute the anticipated break-even number of barrels for the following year. Round to the nearest whole barrel.
barrels
Explanation / Answer
per unit Sales $4,896,000 34000 Less: Variable cost Cost of goods sold (1224000*75%) $918,000 Selling, general and administration (544000*50%) 272,000 Contribution Margin 3,706,000 109 Fixed cost Cost of goods sold (1224000*25%) $306,000 Selling, general and administration (544000*50%) 272,000 Total fixed cost 578,000 Income from operations 3,128,000 ans a Break even Fixed cost/CM per unit 5303 barrel 578000/109 ans b Break even Fixed cost/CM per unit 5461 barrel (578000+17300)/109 If any doubt please comment