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 $39,758 $16,447 10,578 $27,025 $12,733 Income from operations "Before special items In addition, assume that Anheuser-Busch nBev sold 320 million barrels of beer during the year. Assume ha varable costs were 70 o e cost of goods sold and 40% of sell ng. 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 faities are expected to increase fixed costs by $400 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 the nearest whole barrel. a. Compute the break-even number of barrels for the current yean x barrels b. Compute the anticipated break-even number of barrels for the following year barrels

Explanation / Answer

1.    Break Even Point = Fixed Cost/ Contribution Per unit = 11281/75.04 150 barrels Notes : Calculation of Fixed and variable Cost Expense Total Cost ($) Fixed Cost ($) Variable Cost ($) Cost of goods Sold 16447 4934 11513 (16447*30%) (16447*70%) Selling general and 10578 6347 4231 administration (10578*60%) (10578*40%) Total 27025 11281 15744 Calculation of Contribution per unit Particulars Amount ($) Sales 39758 Less: Variable Cost 15744 Contribution (A) 24014 No of units (B) 320 Contribution P u (A/B) 75.04 2.    Break Even Point = Fixed Cost/ Contribution Per unit 11281+400/75.04 156 barrels Notes New Fixed Cost 11681

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