E11-12 Break-even sales Obj. 3 Molson-Coors Brewing Company (TAP) reported the f

Question

E11-12 Break-even sales Obj. 3 Molson-Coors Brewing Company (TAP) reported the following operating information for a recent year (in millions): a. 94,147,059 barrels Sales Cost of goods sold Gross profit Marketing, general, and admin.expenses Operating income Before special items 3,568 (2,164) $1,404 (1.052) 352* Assume that Molson-Coors sold 120 million barrels of beer during the year, variable costs were 70% of the cost of goods sold and 40% of marketing, general, and adminis- trative expenses, and that the remaining costs are fixed. For the following year, assume that Molson-Coors 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 $100 million. Rounding to the nearest cent a. Compute the break-even sales (barrels) for the current year b. Compute the anticipated break-even sales (barrels) for the following year.

Explanation / Answer

(a) Break even sales = 94.15 million barrels

(b) Revised fixed costs will be $1,280.40 + $100 = $1,380.40 million

Break even sales = 101.5 million barrels

Current year Sales volume 120 million Million $ Per barrel Sales 3568.00 29.73 Variable expenses Cost of goods sold 1514.80 12.62    Marketing,general and admn.expenses 420.80 3.51 Tota variable cost 1935.60 16.13 Contribution margin 1632.40 13.60 Fixed costs Cost of goods sold 649.20    Marketing,general and admn.expenses 631.20 Total fixed costs 1280.40 Operating income 352.00 Breaek even sales units = Fixed costs / Contribution per barrel                                                   =1280.40 million / $13.60                                                   = 94.15 million barrels Workings: Cost of goods sold 2164.00 Variable cost of goods sold (70%) 1514.80 Fixed cost of goods sold 649.20 Marketing,general and admn.expenses 1052.00 variable cost(40%) 420.80 Fixed cost 631.20

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.