Break-Even SalesBeerBev, Inc., reported the following operating information for a recent year:Net sales$4,400,000Cost of goods sold$1,100,000Selling, general and administration250,000$1,350,000Income from operations$ 3,050,000**Before special itemsIn addition, assume that BeerBev sold 25,000 barrels of beer during the year. Assume that variable costs were 75% of the cost of goods sold and 50% of selling, generand administration expenses. Assume that the remaining costs are fixed. For the following year, assume that BeerBev expects pricing, variable costs per barrel, and fixecosts to remain constant, except that new distribution and general office facilities are expected to increase fixed costs by $12,000.When computing the cost per unit amounts for the break-even formula, round to two decimal places. If required, round your final answer to one decimal place.a. Compute the break-even number of barrels for the current year.barrelsb. Compute the anticipated break-even number of barrels for the following year.barrelsPreviousNextCheck My Work 5 more Check My Work uses remaining.Email l nctructorSave and ExitSuhmit Assignment for Grad

Answered: Break-Even Sales BeerBev, Inc.,…

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 Darby Company, operating at full capacity, sold 139,000 units at a price of $90 per unit during the current year. Its income statement is as follows: Sales $12,510,000 Cost of goods sold 4,440,000 Gross profit $8,070,000 Expenses: Selling expenses $2,220,000 Administrative expenses 1,320,000 Total expenses 3,540,000 Income from operations $4,530,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $1,170,000 in yearly sales. The expansion will increase fixed costs by $156,000, but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current…
Break-Even Sales BeerBev, Inc., reported the following operating information for a recent year: $4,224,000 $1,056,000 440,000 $1,496,000 $ 2,728,000* Net sales Cost of goods sold Selling, general, and administrative expenses Income from operations *Before special items In addition, assume that BeerBev sold 44,000 barrels of beer during the year. Assume that variable costs were 75% of the cost of goods sold and 50% of selling, general, and administration expenses. Assume that the remaining costs are fixed. For the following year, assume that BeerBev 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 $14,500. When computing the cost per unit amounts for the break-even formula, round to two decimal places. If required, round your final answer to one decimal place. a. Compute the break-even number of barrels for the current year. barrels b. Compute the anticipated…
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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 $190 per unit during the current year. Its income statement is as follows: Sales $190,000,000 Cost of goods sold (100,000,000) Gross profit $90,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 19,000,000 Total expenses (33,000,000) Operating income $57,000,000 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 $13,300,000 in yearly sales. The expansion will increase fixed costs by $5,000,000 but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs…
Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $190 per unit during the current year. Its income statement is as follows: Sales $190,000,000 Cost of goods sold (102,000,000) Gross profit $88,000,000 Expenses: Selling expenses $15,000,000 Administrative expenses 14,700,000 Total expenses (29,700,000) Operating income $58,300,000 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 $11,400,000 in yearly sales. The expansion will increase fixed costs by $5,000,000 but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs…
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 $15,000,000 Administrative expenses 14,300,000 Total expenses (29,300,000) Operating income $59,700,000 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…
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 143,000 units at a price of $102 per unit during the current year. Its income statement is as follows: Sales $14,586,000 Cost of goods sold 5,168,000 Gross profit $9,418,000 Expenses: Selling expenses $2,584,000 Administrative expenses 1,564,000 Total expenses 4,148,000 Income from operations $5,270,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $1,326,000 in yearly sales. The expansion will increase fixed costs by $176,800, but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current…
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 176,600 units at a price of $81 per unit during the current year. Its income statement is as follows: Sales $14,304,600 Cost of goods sold 5,076,000 Gross profit $9,228,600 Expenses: Selling expenses $2,538,000 Administrative expenses 1,512,000 Total expenses 4,050,000 Income from operations $5,178,600 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $1,296,000 in yearly sales. The expansion will increase fixed costs by $172,800, but will not affect the relationship between sales and…
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…
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 114,800 units at a price of $108 per unit during the current year. Its income statement is as follows: Sales $12,398,400 Cost of goods sold 4,392,000 Gross profit $8,006,400 Expenses: Selling expenses $2,196,000 Administrative expenses 1,332,000 Total expenses 3,528,000 Income from operations $4,478,400 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $972,000 in yearly sales. The expansion will increase fixed costs by $129,600, but will not affect the relationship between sales and variable costs. 4. Compute the break-even sales (units) under the proposed program for the following…

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