The Boston Beer Company Inc. (SAM) produces Samuel Adams beer and other alcoholic beverages. Boston Beer reported the following operating information for a recent year (in thousands): Sales Cost of goods sold $7,280,000 $1,820,000 Selling, general, and administrative expenses 1,170,000 (2,990,000) Operating income $4,290,000* *Before special items In addition, assume that Boston Beer sold 65,000 thousand 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 Boston Beer 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 $31.20 million. a. Compute the break-even number of barrels for the current year. Round to the nearest thousand of barrels. X thousand barrels b. Compute the anticipated break-even number of barrels for the following year. Round to the nearest thousand of barrels. X thousand barrels
The Boston Beer Company Inc. (SAM) produces Samuel Adams beer and other alcoholic beverages. Boston Beer reported the following operating information for a recent year (in thousands): Sales Cost of goods sold $7,280,000 $1,820,000 Selling, general, and administrative expenses 1,170,000 (2,990,000) Operating income $4,290,000* *Before special items In addition, assume that Boston Beer sold 65,000 thousand 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 Boston Beer 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 $31.20 million. a. Compute the break-even number of barrels for the current year. Round to the nearest thousand of barrels. X thousand barrels b. Compute the anticipated break-even number of barrels for the following year. Round to the nearest thousand of barrels. X thousand barrels
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
am. 129.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step 1: Introduction to Break even analysis
VIEWStep 2: Calculation of contribution margin per unit :(Working note)
VIEWStep 3: Calculation of total fixed costs (Working note):
VIEWStep 4: a) Calculation of current break even number of barrels in current year :
VIEWStep 5: b) Calculation of proposed break even number of barrels for the following year:
VIEWSolution
VIEWStep by step
Solved in 6 steps with 9 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education