Break-Even Sales Anheuser-Busch InBev SA/NV (BUD) reported the following operating information for a recent year: Sales $3,888,000 Cost of goods sold $972,000 Selling, general, and administrative expenses 486,000 1,458,000 Operating income $2,430,000* *Before special items In addition, assume that Anheuser-Busch InBev sold 27,000 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 $14,600. 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 Break-Even Analysis Media outlets such as ESPN and FOX Sports often have websites that provide in-depth coverage of news and events. Portions of these websites are restricted to members who pay a monthly subscription to gain access to exclusive news and commentary. These websites typically offer a free trial period to introduce viewers to the websites. Assume that during a recent fiscal year, ESPN.com spent $4,200,000 on a promotional campaign for the ESPN.com websites that offered two free months of service for new subscribers. In addition, assume the following information: Number of months an average new customer stays with the service (including the two free months) Revenue per month per customer subscription Variable cost per month per customer subscription 14 months $10.00 $5.00 Determine the number of new customer accounts needed to break even on the cost of the promotional campaign. In forming your answer, (1) treat the cost of the promotional campaign as a fixed cost, and (2) treat the revenue less variable cost per account for the subscription period as the unit contribution margin. accounts Sales Mix and Break-Even Sales Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $416,500, and the sales mix is 70% bats and 30% gloves. The unit selling price and the unit variable cost for each product are as follows: Products Bats Gloves Unit Selling Price Unit Variable Cost $50 110 $70 180 a. Compute the break-even sales (units) for the overall enterprise product, E. 14,362.1 X units b. How many units of each product, baseball bats and baseball gloves, would be sold at the break-even point? Baseball bats 10,053.4 X units Baseball gloves 4,308.6 X units. Feedback