Question

Anheuser-Busch InBev SA/NV (BUD) reported the following operating information for a recent year:

Sales		$4,800,000
Cost of goods sold	$1,200,000
Selling, general, and administrative expenses	600,000	1,800,000
Operating income		$3,000,000*
*Before special items

In addition, assume that Anheuser-Busch InBev sold 50,000 barrels of beer during the year. Assume that variable costs were 75% of the cost of goods sold and 50% of selling, general, and administrative 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 $18,000.

a. Compute the break-even number of barrels for the current year. Round to the nearest whole barrel.
______ barrels

b. Compute the anticipated break-even number of barrels for the following year. Round to the nearest whole barrel.
______ barrels

Answer 1