Assignment 3a Problem Set eBook Break-Even Sales Anheuser-Busch InBev Companies,
ID: 2550262 • Letter: A
Question
Assignment 3a Problem Set eBook Break-Even Sales Anheuser-Busch InBev Companies, Inc., reported the following operating information for a recent year: Sales Cost of goods sold Selling, general and administration 1. EX.19-06 ALGO 2. PR.19-06B.ALGO $4,368,000 $1,092,000 702,000 $1,794,000 3. EX.19-12.ALGO 4. BE.19-06. ALGO 5. PR.19-04AALGO 6. EX.19-09 ALGO Income from operations $2,574,000 Before special items In addition, assume that Anheuser-Busch InBev sold 39,000 barrels of beer during the year. Assume that variable costs were 75% of and 50% of selling, general, and administration expenses. Assume that the remaining costs are fixed. For the following year, assume InBev expects pricing, variable costs per barrel, and fixed costs to remain constant, except that new distribution and general office fac Kincrease fixed costs by $18,700 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 Feedback PCheck My Work Check My Work Proaress 3I6 itemsExplanation / Answer
Answer a.
Number of units sold = 39,000
Sales = $4,368,000
Selling price per unit = $4,368,000 / 39,000
Selling price per unit = $112
Variable Expenses:
Cost of Goods Sold = 75% * $1,092,000
Cost of Goods Sold = $819,000
Selling, general and administration = 50% * $702,000
Selling, general and administration = $351,000
Total Variable Expenses = $819,000 + $351,000
Total Variable Expenses = $1,170,000
Variable Expenses per unit = $1,170,000 / 39,000
Variable Expenses per unit = $30
Fixed Expenses:
Cost of Goods Sold = 25% * $1,092,000
Cost of Goods Sold = $273,000
Selling, general and administration = 50% * $702,000
Selling, general and administration = $351,000
Total Fixed Expenses = $273,000 + $351,000
Total Fixed Expenses = $624,000
Contribution Margin per unit = Selling price per unit - Variable Expenses per unit
Contribution Margin per unit = $112 - $30
Contribution Margin per unit = $82
Breakeven in units = Fixed Expenses / Contribution Margin per unit
Breakeven in units = $624,000 / $82
Breakeven in units = 7,610
Break-even number of barrels for the current year is 7,610
Answer b.
Company expects an increase in fixed costs by $18,700:
Selling price per unit = $112
Variable Expenses per unit = $30
Fixed Expenses = $624,000 + $18,700
Fixed Expenses = $642,700
Contribution Margin per unit = Selling price per unit - Variable Expenses per unit
Contribution Margin per unit = $112 - $30
Contribution Margin per unit = $82
Breakeven in units = Fixed Expenses / Contribution Margin per unit
Breakeven in units = $642,700 / $82
Breakeven in units = 7,838
Break-even number of barrels for the following year is 7,838