Question

Break-Even Sales Anheuser-Busch InBev SA/NV (BUD) reported the following operating information for a recent year (in millions): Sales $45,517 Cost of goods sold $17,803 Selling, general, and administrative expenses 14,439 (32,242) Operating income $13,275* *Before special items In addition, assume that Anheuser-Busch InBev sold 500 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 administrative 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. In computing variable and fixed costs and per-barrel amounts, round to two decimal places. Round the break-even number of barrels to one decimal place. x million barrels b. Compute the anticipated break-even number of barrels for the following year. Round to one decimal place in millions of barrels. x million barrels

Answer 1

		Total	Per barrel
	Sales	45,517.00	91.03
	Less: Variable cost
	Cost of goods sold	13,352.25	26.70
	Selling general	7,219.50	14.44
	Contribution margin	24,945.25	49.89
	Less: Fixed cost
	Cost of goods sold	4,450.75
	Selling general	7,219.50
	Net Income	13,275.00
a)	Break Even = Fixed cost / Contribution margin per barrel
	=11670.25 / 49.89
	233.9
b)	Break Even = Fixed cost / Contribution margin per barrel
	=(11670.25+400) / 49.89
	241.9