Break-Even Sales BeerBev, Inc., reported the following operating information for
ID: 2582821 • Letter: B
Question
Break-Even Sales BeerBev, Inc., reported the following operating information for a recent year: Net sales Cost of goods sold Selling, general and administration $4,960,000 $1,240,000 558,000 $1,798,000 $3,162,000* Income from operations "Before special items In addition, assume that Beeree sold 31,000 barrels of beer during the year Assume at variable costs were 75% of the cost ofa oods.so dandosmr selling, generat and administration expenses. Assume that the remaining costs are fixed. For the following year, assume that BeerBev expects pricing, by $17.700. 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 variable costs per barrel, and fixed costs to remain constant, except that new distribution and generat office facilities are expected to increase fixed place. a. Compute the break-even number of barrels for the current year barrels b. Compute the anticipated break-even number of barrels for the following year. barrels Check My Work Previous NextExplanation / Answer
Answer:
Break even sales is approx 4868 for the current year
For the following year fixed costs will increase rest will remain the same
New fixed costs = 589000 + 17700 = 606700
Putting these values in the break even formula
X*160 = 606700 + 39*X
X = 5014 approx for the following year
Net sales 4960000 COGS 1240000 SG&A 558000 1798000 Income from operations 3162000 Beerbev Sold 31000 barrels of beer during the year Break even for the current year No of units sold * Sales price = Fixed costs + variable Costs Unit sales price =( Net sales /31000) 160 Total variable costs (0.75*COGS + 0.5 * SG&A) 1209000 Unit variable cost (1209000/31000) 39 Total fixed cost 589000 Lets say break even units are X Putting these values in the formula X*160 = fixed cost + unit variable cost * no of units X*160 = 589000 + 39 *X 4867.768595