Question

Anheuser-Busch InBev Companies, Inc., reported the following operating information for a recent year (in millions of dollars): Net sales $47,063 Cost of goods sold $18,756 Selling, general and administration 12,999 $31,755 Income from operations $15,308* *Before special items In addition, assume that Anheuser-Busch InBev sold 400 million 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 $300 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 one decimal place. a. Compute the break-even number of barrels for the current year. million barrels b. Compute the anticipated break-even number of barrels for the f

Answer 1

Answer:

a) Break even = 480.5 units ≈ 481 Million units

b) Breakeven = 8,014,162,500 units

Explanation:

calculations are in millions

Breakeven = fixed costs / contribution per unit

selling price per unit = $47063/400 = $117.66

Variable cost = ($18756*75%) + ($31755*50%) = $14067 +15877.50 =$29944.5/400 units =$74.86

contribution = $117.66-$74.86 = $42.80

fixed costs = ( $18756*25%) +( $31755*50%) =  $4689 + 15877.50 = $20566.50

Breakeven = $20566.50/$42.80 = 480.5 units

b) calculations

fixed costs = 20,566,500 + 300,000,000

                 = 320,566,500

break even = $320,566,500 /0.04

                  = 8,014,162,500 units