# Question

Anheuser- Busch InBev, reported the following operating information for a recent year (in millions):

Net sales ................. $ 36,297

Cost of goods sold ............. $ 16,151

Selling, general and administration ...... 9,249

$ 25,400

Income from operations .......... $ 10,897*

* Before special items

In addition, assume that Anheuser-Busch InBev sold 300 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 $ 350 million.

a. Compute the break- even number of barrels for the current year. 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.

Net sales ................. $ 36,297

Cost of goods sold ............. $ 16,151

Selling, general and administration ...... 9,249

$ 25,400

Income from operations .......... $ 10,897*

* Before special items

In addition, assume that Anheuser-Busch InBev sold 300 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 $ 350 million.

a. Compute the break- even number of barrels for the current year. 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.

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