Question
1. A new restaurant is ready to open for business. It is estimated that the food cost (variable cost) will be 0.78% of sales, while
1. A new restaurant is ready to open for business. It is estimated that the food cost (variable cost) will be 0.78% of sales, while fixed cost will be $450,000. The first years sales estimates are $1,222,703. Calculate the firms operating breakeven level of sales.
2. A new restaurant is ready to open for business. It is estimated that the food cost (variable cost) will be 40% of sales, while fixed cost will be $427,021. The first years sales estimates are $1,250,000. Calculate the firms degree of operating leverage (DOL).
3.Maverick Technologies has sales of $3,000,000. The companys fixed operating costs total $511,325 and its variable costs equal 60% of sales. The companys interest expense is $500,000. What is the companys degree of total leverage (DTL)?
4. Maverick Technologies has sales of $3,000,000. The companys fixed operating costs total $500,000 and its variable costs equal 60% of sales, so the companys current operating income is $700,000. The companys interest expense is $583,829. What is the companys degree of financial leverage (DFL)?
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