Molson-Coors Brewing Company (TAP) reported the following operating information for a recent year (in millions):

Sales $3,568
Cost of goods sold (2,164)
Gross profit $1,404
Marketing, general, and admin. expenses (1,052)
Operating income $352

*Before special items

Assume that Molson-Coors sold 120 million barrels of beer during the year, Costs that vary in total dollar amount as the level of activity changes. variable costs were 70% of the cost of goods sold and 40% of marketing, general, and administrative expenses, and that the remaining costs are fixed. For the following year, assume that Molson-Coors expects pricing, variable costs per barrel, and Costs that tend to remain the same in amount, regardless of variations in the level of activity. fixed costs to remain constant, except that new distribution and general office facilities are expected to increase fixed costs by $100 million.

Round intermediate calculations to the nearest cent and the final answers to the nearest whole barrel. (Do not round to the nearest million.)

a. Compute the break-even sales (barrels) for the current year.
barrels

b. Compute the anticipated break-even sales (barrels) for the following year.
barrels

1)Break Even Sales Volume in Units=105.789067 million barrels

2))Break Even Sales Volume in Units=114.0512569 million barrels

Explanation:

Break Even Sales Volume in Units= Fixed Costs/ Contribution Margin per unit

Given

Molson-Coors

All figures in millions

Sales $3,568

Cost of goods sold (2,164)

Gross profit $1,404

Marketing, general, and admin. expenses (1,052)

Operating income $352

Molson-Coors

        All figures in millions

Sales $3,568

Variable Cost of goods sold (2,164)*70%=  (15,14.8)

Variable Marketing, general, and admin. expenses (1,052) *40%=  (600.8)

Contribution Margin $1,452.4

Fixed Cost of Goods Sold 649.2

Marketing, general, and admin. expenses (1,052) *60%= $ 631.2

Operating income $172

Break Even Sales Volume in Units= Fixed Costs/ Contribution Margin per unit

When Fixed Costs are not increased in the current year.

Break Even Sales Volume in Units= 649.2+631.2/12.1033 (millions)

1)Break Even Sales Volume in Units=105.789067 millions barrels

When Fixed Costs are increased in the following year.

Break Even Sales Volume in Units= 649.2+631.2+ 100/12.1033 (milions)

2))Break Even Sales Volume in Units=114.0512569 millions barrels

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