Break-Even Sales
Suntory Holdings Limited is a Japanese beverage maker that produces alcoholic and non-alcoholic beverages including Suntory whiskey, Orangina, Ribena, and Lucozade. Suntory reported the following operating information for a recent year (in billions of JPY):
Net sales |
JPY 1,411 |
Cost of goods sold |
629 |
Selling, general and administration |
688 |
|
1,317 |
Income from operations |
94 |
In addition, assume that Suntory sold 250 million barrels of beverages during the year. Assume that variable costs were 70% of the cost of goods sold and 40% of selling, general, and administration expenses. Assume that the remaining costs are fixed. For the following year, assume that Suntory 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 JPY 4 billion.
When computing the cost per unit amounts for the break-even formula, round to four decimal places. If required, round your final answer to the nearest whole barrel.
a.Compute the break-even number of barrels for the current year.
b.Compute the anticipated break-even number of barrels for the following year.