Finance Lunch N' Learn Pre-knowledge Check

SVC per barrel may vary among breweries for the same brand/package due to various factors. Line speed and technology can affect the efficiency and productivity of the brewing process, leading to differences in costs. The cost of utilities, such as electricity and water, can also vary depending on the location and infrastructure of the breweries. Additionally, labor costs can differ based on the wages and benefits offered by each brewery. Therefore, all of these factors combined can contribute to variations in SVC per barrel among breweries.

The correct answer is "All of the Above" because the freight cost standard on brand and geographic P&Ls can be affected by fuel costs, the source brewery/breweries for a given product, and how much beer can be fit on a truck. Fuel costs play a significant role in determining the overall freight cost, as higher fuel prices can increase transportation expenses. The source brewery or breweries for a product can impact the distance and route of transportation, thereby affecting freight costs. Additionally, the amount of beer that can be fit on a truck can determine the number of shipments required and subsequently impact freight costs.

The answer explains that not all cases or barrels hold the same financial value within MillerCoors. It states that cases deliver a variety of profits, indicating that different types of cases or barrels generate different levels of profit. It also mentions that profit is a key priority alongside volume, suggesting that MillerCoors considers both factors when evaluating the financial value of cases or barrels.

Mix variances occur because brands, packages, and geographies have a per-unit difference in both revenue and cost. This means that different products or markets may generate different levels of revenue and incur different costs per unit sold. These variations can impact the overall financial performance of a company and need to be taken into account when analyzing the profitability of different product lines or geographical markets.

Cans generally have the highest gross margin per barrel compared to kegs and bottles. This is because cans are more cost-effective to produce and transport. Cans are lightweight, stackable, and take up less space, allowing for more efficient storage and shipping. Additionally, cans have a longer shelf life and better protection against light and oxygen, preserving the quality of the product. These factors contribute to higher profit margins for canned packaging.

Selling more Keystone Light instead of Coors Light would result in an unfavorable brand mix due to the greater volume of lower-margin Keystone Light. This means that the company would be selling more of a lower-profit product, which could negatively impact their overall profitability.

A 1% change in net revenue per barrel (bbl) has the biggest impact on operating profits (EBITA) because net revenue represents the total revenue generated after deducting all expenses, including variable costs. Therefore, any change in net revenue will directly affect the operating profits. In comparison, a 5% change in price promotions, a 1% change in domestic volume, and a 1% change in variable cost of sales may also impact profits, but to a lesser extent as they are not directly related to the revenue generated per barrel.

Packaging materials are likely to be the highest product cost component because they often involve the use of various materials such as paper, plastic, and metal, which can be expensive. Additionally, packaging materials require additional processes such as printing, cutting, and assembling, which can increase labor and overhead costs. Moreover, packaging materials are essential for protecting and preserving the product, which adds to their importance and cost.

Freight standards typically change on an annual basis. This means that any regulations, guidelines, or requirements related to freight transportation and logistics are reviewed and updated once a year. This allows for adjustments and improvements to be made in response to industry changes, advancements in technology, and evolving safety and efficiency standards. Quarterly or monthly changes would be too frequent and may cause disruptions and confusion in the industry, while a biannual update may not be sufficient to keep up with the pace of change in the freight industry.

Texas has the highest Gross Margin per bbl compared to the other states listed. This means that Texas generates the highest profit per barrel of oil produced.

MillerCoors spends approximately $1 billion annually on marketing.

The cost of goods on a brand or geographic P&L refers to the expenses directly related to the production of products. These costs can vary depending on factors such as the quantity produced or the materials used. Therefore, the correct answer is "Variable costs involved in producing our products." This option accurately describes the nature of the cost of goods and distinguishes it from fixed costs, which remain constant regardless of production volume.

Miller Lite has the highest gross margin per barrel nationally.