Question

break-even sales

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: $1,736,432
cost of goods sold: $921,980
selling, general, and administrative expenses: 565,779
total expenses: (1,487,759)
operating income: $248,673*
*before special items

in addition, assume that boston beer sold 7,400 thousand barrels of beer during the year. assume that variable costs were 75% of the cost of goods sold and 40% 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 $50 million.

a. compute the break-even number of barrels for the current year. round to the nearest thousand of barrels. in computing the per-barrel amounts, round to the nearest cent.
thousand barrels

b. compute the anticipated break-even number of barrels for the following year. round to the nearest thousand of barrels.
thousand barrels

Explanation:

Calculate current year variable and fixed costs

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Calculate per-barrel unit rates for current year

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Compute break-even points for current and following year

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Answer:

Question a

<blank>5,152</blank> thousand barrels

Question b

<blank>5,604</blank> thousand barrels