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eBook Break-Even Sales BeerBev, Inc., reported the following operating information for a recent year: Net sales $3,360 Cost o
Income from operations $ 1,960 Assume that BeerBev sold 35 million barrels of beer during the year, that variable costs were
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Answer #1
Bifurcation of Costs into fixed and variable
Fixed Variable Total
Cost Of Good Sold $       21,00,00,000 $       63,00,00,000 $           84,00,00,000
(25%:75%)
Marketing, General And Admin $       28,00,00,000 $       28,00,00,000 $           56,00,00,000
(50%:50%)
Total $       49,00,00,000 $       91,00,00,000 $        1,40,00,00,000
Therefore variable cost per barrel = $910000000/35000000
=$26 per barrel
Sales Price Per Barrel = $3360000000/35000000
=$96 per barrel
Contribution Margin Per Barrel = $96 -$26 =$70
Break-Even Point For Current Year
Therefore Break-Even Point = Fixed Cost / Contribution Margin per Barrel
=$490000000/70
=70,00,000 Barrels
Or 7 Million Barrels
Break-Even Point For Following Year
Revised Fixed Cost = $14700000+490000000
$                                                        50,47,00,000
Therefore break-even point
=$504700000/$70
=72,10,000 Barrels
or
7.21 million
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