Bundle: Financial & Managerial Accounting, Loose-leaf Version, 14th + Working Papers For Warren/reeve/duchac's Corporate Financial Accounting, 14th + ... Financial & Managerial Accounting,
14th Edition
ISBN: 9781337802000
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 19, Problem 19.12EX
A.
To determine
Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:
To compute: the break-even number of barrels for the current year.
B.
To determine
To compute: the anticipated break-even number of barrels for the following year.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Break-even salesAnheuser-Busch InBev Companies, Inc., reported the followingoperating information for a recent year (in millions):
Net sales
$47,063
Cost of goods sold
$18,756
Selling, general and administration
12,999
$31,755
Income from operations
$15,308*
*Before special items
In addition, assume that Anheuser-Busch InBev sold 400 million barrelsof beer during the year. Assume that variable costs were 75% of the costof goods sold and 50% of selling, general and administration expenses.
Assume that the remaining costs are fixed. For the following year,assume that Anheuser-Busch InBev expects pricing, variable costs perbarrel, and Fixed costs to remain constant, except that new distributionand general office facilities are expected to increase fixed costs by $300million.
a. Compute the break-even number of barrels for the current year.Note: For the selling price per barrel and variable costs per barrel,round to the nearest cent. Also present the break-even units…
Break-Even Sales
BeerBev, Inc., reported the following operating information for a recent year:
Net sales
$10,384,000
Cost of goods sold
$2,596,000
Selling, general and administration
1,062,000
$3,658,000
Income from operations
$ 6,726,000*
*Before special items
In addition, assume that BeerBev sold 59,000 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 $35,400.
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.fill in the blank 1…
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
Marketing, general, and admin. expenses
Income from operations
$7,104
(1,776)
$5,328
(518)
$ 4,810
Assume 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, 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 $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 barrels
b. Compute the anticipated break-even sales (barrels) for the following year. Round your answer to two decimal places. Enter…
Chapter 19 Solutions
Bundle: Financial & Managerial Accounting, Loose-leaf Version, 14th + Working Papers For Warren/reeve/duchac's Corporate Financial Accounting, 14th + ... Financial & Managerial Accounting,
Ch. 19 - Describe how total variable costs and unit...Ch. 19 - Which of the following costs would be classified...Ch. 19 - Describe how total fixed costs and unit fixed...Ch. 19 - In applying the high-low method of cost estimation...Ch. 19 - If fixed costs increase, what would be the impact...Ch. 19 - Prob. 6DQCh. 19 - If the unit cost of direct materials is decreased,...Ch. 19 - Both Austin Company and Hill Company had the same...Ch. 19 - Prob. 9DQCh. 19 - Prob. 10DQ
Ch. 19 - High-low method The manufacturing costs of...Ch. 19 - Contribution margin Lanning Company sells 160,000...Ch. 19 - Prob. 19.3BECh. 19 - Prob. 19.4BECh. 19 - Prob. 19.5BECh. 19 - Prob. 19.6BECh. 19 - Margin of safety Liu Company has sales of...Ch. 19 - Classify costs Following is a list of various...Ch. 19 - Identify cost graphs The following cost graphs...Ch. 19 - Prob. 19.3EXCh. 19 - Identify activity bases From the following list of...Ch. 19 - Identify fixed and variable costs Intuit Inc....Ch. 19 - Prob. 19.6EXCh. 19 - High-low method Ziegler Inc. has decided to use...Ch. 19 - High-low method for a service company Boston...Ch. 19 - Contribution margin ratio A. Young Company budgets...Ch. 19 - Contribution margin and contribution margin ratio...Ch. 19 - Prob. 19.11EXCh. 19 - Prob. 19.12EXCh. 19 - Break-even sales Currently, the unit selling price...Ch. 19 - Prob. 19.14EXCh. 19 - Prob. 19.15EXCh. 19 - Break even analysis for a service company Sprint...Ch. 19 - Prob. 19.17EXCh. 19 - Prob. 19.18EXCh. 19 - Prob. 19.19EXCh. 19 - Prob. 19.20EXCh. 19 - Prob. 19.21EXCh. 19 - Break-even sales and sales mix for a service...Ch. 19 - Margin of safety A. If Canace Company, with a...Ch. 19 - Prob. 19.24EXCh. 19 - Operating leverage Beck Inc. and Bryant Inc. have...Ch. 19 - Classify costs Seymour Clothing Co. manufactures a...Ch. 19 - Break-even sales under present and proposed...Ch. 19 - Prob. 19.3APRCh. 19 - Prob. 19.4APRCh. 19 - Prob. 19.5APRCh. 19 - Contribution margin, break even sales,...Ch. 19 - Classify costs Cromwell Furniture Company...Ch. 19 - Prob. 19.2BPRCh. 19 - Break even sales and cost-volume-profit chart For...Ch. 19 - Prob. 19.4BPRCh. 19 - Sales mix and break even sales Data related to the...Ch. 19 - Prob. 19.6BPRCh. 19 - Prob. 1ADMCh. 19 - Break-even subscribers for a video service Star...Ch. 19 - Prob. 3ADMCh. 19 - Prob. 19.1TIFCh. 19 - Prob. 19.3TIF
Knowledge Booster
Similar questions
- Break-Even Sales BeerBev, Inc., reported the following operating information for a recent year: Net sales $7,168,000 Cost of goods sold $1,792,000 Selling, general, and administrative expenses 784,000 $2,576,000 Income from operations $ 4,592,000* *Before special items In addition, assume that BeerBev sold 56,000 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 $25,200. 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.fill in the…arrow_forwardBreak-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…arrow_forwardBreak-Even Sales BeerBev, Inc., reported the following operating information for a recent year: Net sales $10,560,000 Cost of goods sold $2,640,000 Selling, general, and administrative expenses 990,000 $3,630,000 Income from operations $ 6,930,000* *Before special items In addition, assume that BeerBev sold 55,000 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 $34,700. 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. fill in the…arrow_forward
- 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 Marketing, general, and admin. expenses Income from operations $4,592 (1,148) $3,444 (492) $ 2,952 Assume that Cold One sold 41 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 $15.99 million. a. Compute the break-even sales (barrels) for the current year. Round your answer to two decimal places. Enter your answers in millions. million barrels b. Compute the anticipated break-even sales (barrels) for the following year. Round your answer to two decimal places. Enter your…arrow_forwardBreak-Even Sales BeerBev, Inc., reported the following operating information for a recent year: Net sales $4,400,000 Cost of goods sold $1,100,000 Selling, general and administration 250,000 $1,350,000 Income from operations $ 3,050,000* *Before special items In 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, gener and administration expenses. Assume that the remaining costs are fixed. For the following year, assume that BeerBev expects pricing, variable costs per barrel, and fixe costs 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. barrels b. Compute the anticipated break-even…arrow_forwardBreak - Even Sales Cold One Beverage Company reported the following operating information for a recent year (in millions): Line Item Description Amount Net sales $3,600 Cost of goods sold (900) Gross profit $2,700 Selling, general, and admin. expenses (350) Operating income $2,350 Assume that Cold One sold 25 million barrels during the year, variable costs were 70% of the cost of goods sold and 50% of selling, 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 $13.35 million. a. Compute the break-even sales (barrels) for the current year. Round intermediate computations to the nearest cent and final answer up the nearest whole barrel fill in the blank 1 of 1 million barrels b. Compute the anticipated break - even sales (barrels) for the…arrow_forward
- Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 135,300 units at a price of $72 per unit during the current year. Its income statement is as follows: Sales $9,741,600 Cost of goods sold 3,456,000 Gross profit $6,285,600 Expenses: Selling expenses $1,728,000 Administrative expenses 1,032,000 Total expenses 2,760,000 Income from operations $3,525,600 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative 30% 70% expenses Management is considering a plant expansion program for the following year that will permit an increase of $792,000 in yearly sales. The expansion will increase fixed costs by $105,600, 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 aurrent year. Total variable costs Total fixed costs 2. Determine (a) the unit variable cost…arrow_forwardBreak-Even Sales BeerBev, Inc., reported the following operating information for a recent year (in millions): $6,688 Sales $1,672 Cost of goods sold $5,016 Gross profit 456 Marketing, general, and admin. expenses $ 4,560 Income from operations Assume that BeerBev sold 38 million barrels of beer during the year, that variable costs were 75% of the cost of goods sold and 50% of marketing, general and administration expenses, and 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 $19.38 million. a. Compute the break-even sales (in barrels) for the current year. Round your answer to two decimal places. Enter your answers in millions.arrow_forwardBreak-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…arrow_forward
- 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…arrow_forwardBreak-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 127,900 units at a price of $51 per unit during the current year. Its income statement is as follows: Sales $6,522,900 Cost of goods sold 2,312,000 Gross profit $4,210,900 Expenses: Selling expenses $1,156,000 Administrative expenses 697,000 Total expenses 1,853,000 Income from operations $2,357,900 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 $510,000 in yearly sales. The expansion will increase fixed costs by $68,000, 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 year.…arrow_forwardBreak-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 161,800 units at a price of $132 per unit during the current year. Its income statement is as follows: Sales $21,357,600 Cost of goods sold 7,568,000 Gross profit $13,789,600 Expenses: Selling expenses $3,784,000 Administrative expenses 2,288,000 Total expenses 6,072,000 Income from operations $7,717,600 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 $1,980,000 in yearly sales. The expansion will increase fixed costs by $264,000, 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…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub