Break-Even Sales Cold One Brewing Company reported the following operating information for a recent year (in millions): Sales Cost of goods sold Gross profit $5,472 (1,368) $4,104 Marketing, general, and admin. expenses (456) Income from operations $ 3,648 Assume that Cold One sold 38 million barrels of beer during the year, variable costs were 75% of the cost of goods sold and 50% of marketing, general, and administrative 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 to remain constant, except that new distribution and general office facilities are expected to increase fixed costs by $17.1 million. a. Compute the break-even sales (barrels) for the current year. Round your answer to two decimal places. Enter your answers in millions. 9.3 X million barrels b. Compute the anticipated break-even sales (barrels) for the following year. Round your answer to two decimal places. Enter your answers in millions. 3,565.1 X million barrels

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter6: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 7BE: Margin of safety Jorgensen Company has sales of 380,000,000, and the break-even point in sales...
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Break-Even Sales
Cold One Brewing Company reported the following operating information for a recent year (in millions):
Sales
Cost of goods sold
Gross profit
$5,472
(1,368)
$4,104
Marketing, general, and admin. expenses
(456)
Income from operations
$ 3,648
Assume that Cold One sold 38 million barrels of beer during the year, variable costs were 75% of the cost of goods sold and 50% of marketing, general, and administrative 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 to remain constant, except that new distribution
and general office facilities are expected to increase fixed costs by $17.1 million.
a. Compute the break-even sales (barrels) for the current year. Round your answer to two decimal places. Enter your answers in millions.
9.3 X million barrels
b. Compute the anticipated break-even sales (barrels) for the following year. Round your answer to two decimal places. Enter your answers in millions.
3,565.1 X million barrels
Transcribed Image Text:Break-Even Sales Cold One Brewing Company reported the following operating information for a recent year (in millions): Sales Cost of goods sold Gross profit $5,472 (1,368) $4,104 Marketing, general, and admin. expenses (456) Income from operations $ 3,648 Assume that Cold One sold 38 million barrels of beer during the year, variable costs were 75% of the cost of goods sold and 50% of marketing, general, and administrative 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 to remain constant, except that new distribution and general office facilities are expected to increase fixed costs by $17.1 million. a. Compute the break-even sales (barrels) for the current year. Round your answer to two decimal places. Enter your answers in millions. 9.3 X million barrels b. Compute the anticipated break-even sales (barrels) for the following year. Round your answer to two decimal places. Enter your answers in millions. 3,565.1 X million barrels
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