Break-Even Sales

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

Sales		$4,816,000
Cost of goods sold	$1,204,000
Selling, general, and administrative expenses	688,000	1,892,000
Operating income		$2,924,000*
*Before special items

In addition, assume that Anheuser-Busch InBev sold 43,000 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 $19,400.

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

Margin of Safety

a. If Canace Company, with a break-even point at $469,200 of sales, has actual sales of $680,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number.

1. $

2. %

b. If the margin of safety for Canace Company was 20%, fixed costs were $944,000, and variable costs were 80% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.) $