Question

Anheuser-Busch InBev SA/NV (BUD) reported the following operating information for a recent year (in millions):

Answer 1

Answer:

(a) 233.9 million barrels

(b) 241.9 million barrels

Explanation:

Given that,

Sales = $45,517

Cost of goods sold = $17,803

Selling, general, and administrative expenses = 14,439

Operating income = $13,275

(a) Fixed cost:

= 25% of the cost of goods sold and 50% of selling, general, and administrative expenses

= (0.25 × $17,803 ) + (0.5 × 14,439)

= $4,450.75 + $7,219.5

= $11,670.25

Variable cost per unit:

= (75% of the cost of goods sold + 50% of selling, general, and administrative expenses) ÷ No. of barrels of beer sold

= [(0.75 × $17,803 ) + (0.5 × 14,439)] ÷ 500

= $41.14

Selling price:

= Sales ÷ No. of beer sold

= $45,517  ÷ 500

= $91.034

Break even point:

= Fixed cost ÷ Contribution per unit

= $11,670.25 ÷ ($91.034 - $41.14)

= 233.9 million barrels

(b) Increases fixed costs by $400 million.

BEP(In million barrels):

= Fixed cost ÷ contribution per unit

= $12,070.25 ÷ $49.894

= 241.9 million barrels