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
