Reference no: EM132685622

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

Net sales $23,507

Cost of goods sold $10,336

Selling, general and administration 7,831

$18,167

Income from operations $ 5,340*

*Before special items

In addition, assume that Anheuser-Busch InBev sold 200 million barrels of beer during the year. Assume that variable costs were 75% 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 $225 million.

Required -

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.