Break-Even SalesCold One Brewing Company reported the following operating information for a recent year (in millions):SalesCost of goods soldGross profitMarketing, general, and admin. expensesIncome from operations$7,104(1,776)$5,328(518)$ 4,810Assume that Cold One sold 37 million barrels of beer during the year, variable costs were 75% of the cost of goods sold and 50% of marketing, general, andadministrative expenses, and that the remaining costs are fixed. For the following year, assume that Cold One expects pricing, variable costs per barrel, and fixed costs toremain constant, except that new distribution and general office facilities are expected to increase fixed costs by $21.09 million.a. Compute the break-even sales (barrels) for the current year. Round your answer to two decimal places. Enter your answers in millions.X million barrelsb. Compute the anticipated break-even sales (barrels) for the following year. Round your answer to two decimal places. Enter your answers in millions.X million barrels

Break-Even Point is the Point where the Contribution margin equals fixed costs or In Short a point…

Answered: Break-Even Sales Cold One Brewing…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $187 per unit during the current year. Its income statement is as follows: Sales $187,000,000 Cost of goods sold (98,000,000) Gross profit $89,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 15,800,000 Total expenses (29,800,000) Operating income $59,200,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $11,220,000 in yearly sales. The expansion will increase fixed costs by $3,000,000 but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs…

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