Question:
Break-Even Sales
BeerBev, Inc., reported the following operating information for a recent year:
|
Net sales
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$4,752,000
|
|
Cost of goods sold
|
$1,188,000
|
|
Selling, general and administration
|
486,000
|
|
$1,674,000
|
|
Income from operations
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$ 3,078,000
|
|
|
In addition, assume that BeerBev sold 27,000 barrels of beer during 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 BeerBev 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 $16,200.
a. Compute the break-even sales (barrels) for the current year. Round to the nearest whole barrel
b. Compute the anticipated break-even sales (barrels) for the following year. Round to the nearest whole barrel.