Question
Eatson's Bakery is considering the addition of a new line of bread to its product offerings. It is expected that each bread will sell for
Eatson's Bakery is considering the addition of a new line of bread to its product offerings. It is expected that each bread will sell for $15-$20 (Choose one of your selling prices) and the variable costs per bread will be $9-$11 (Choose one of your variable costs). Total fixed operating costs are expected to be $20,000. Eatson's faces a marginal tax rate of 35%, will have interest expense associated with this line of $3,000, and expects to sell about 4,000 breads in the first year. a. Put together an income statement for the bread line's first year. Is the line expected to be profitable? b. Calculate the Operating leverage, Financial Leverage, and Combined Leverage at sales of 4,000 breads c. Find the operating break-even point in units and dollars using Goal Seek (Print Screen your goal seek to show that you worked on your goal seek)
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