Question
11.5 Chapter 11 HW - Problem Mastery 1) A new restaurant is ready to open for business. It is estimated that the food cost (variable
11.5 Chapter 11 HW - Problem Mastery 1) A new restaurant is ready to open for business. It is estimated that the food cost (variable cost) will be 0.41% of sales, while fixed cost will be $450,000. The first years sales estimates are $980,786. 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 $468,160. 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 $530,964 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 $556,837. What is the companys degree of financial leverage (DFL)?
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