Accounting 26th Edition by Carl Warren,James Reeve,Jonathan Duchac

Exercise 59

Break-even sales
Anheuser-Busch InBev Companies, Inc., reported the following operating information for a recent year (in millions):

In addition, assume that Anheuser-Busch InBev sold 320 million barrels of beer during the year. Assume that variable costs were 70% of the cost of goods sold and 40% 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 $400 million.
a. Compute the break-even number of barrels for the current year. Note: For the selling price per barrel and variable costs per barrel, round to the nearest cent. Also, round the break-even to the nearest barrel.
b. Compute the anticipated break-even number of barrels for the following year.