Library Back Page 902 of 1345 982 Chapter 19 Cost-Volume-Profit Analysis EX 19-1

Question

Library Back Page 902 of 1345 982 Chapter 19 Cost-Volume-Profit Analysis EX 19-12 Break-even sales A ha se Busch InB for a recent year (in millions): Obj. 3 Com anie, Inc., reported the following operating information VA. 168.9 million barrels Sales Cost of goods sold Selling, general, and administration $47,063 $18,756 12,999 $31,755 $15,308* REAL WORLD Income from operations *Before special items In addition, assume that Anheuser-Busch InBev sold 400 million barrels of beer dur ing 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. 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. Round to one decimal place in millions of barrels.,) B. Compute the anticipated break-even number of barrels for the following year. (Round to one decimal place in millions of barrels.) Obj. 3 A. 15,000 units Currently, the unit selling price of a product is $1,500, the unit variable cost is $1,200, and the total EX 19-13 Break-even sales fixed costs are $4,500,000. A proposal is being evaluated to increase the unit selling price to $1,600 A. Compute the current break-even sales (units) 60% page g82 of 1345

Explanation / Answer

Selling price per unit = 47063/400= 117.6575 Variable cost of goods sold per unit =(18756*75%)/400= 35.1675 Variable selling expenses per unit = (12999*50%)/400= 16.24875 Contribution margin per unit = 117.6575-35.1675-16.24875= 66.24125 Total fixed costs = (18756*25%)+(12999*50%)= 11188.5 A break even point = Fixed costs/Unit contribution margin = 11188.5/66.24125= 168.9 B break even point = Fixed costs/Unit contribution margin =(11188.5+300)/66.24125= 173.4

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