Break-Even Sales
Anheuser-Busch InBev Companies, Inc., reported the following operating information for a recent year (in millions of dollars):
Net sales $39,758 Cost of goods sold $16,447 Selling, general and administration 10,578 $27,025 Income from operations $12,733* *Before special items 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.
When computing the cost per unit amounts for the break-even formula, round to two decimal places. If required, round your final answer to the nearest whole barrel.
a. Compute the break-even number of barrels for the current year.
b. Compute the anticipated break-even number of barrels for the following year.