Question
Healthy Foods Inc. sells 40-pound bags of grapes to the military for $15 a bag. The fixed costs of this operation are $91,000, while the
Healthy Foods Inc. sells 40-pound bags of grapes to the military for $15 a bag. The fixed costs of this operation are $91,000, while the variable costs of grapes are $.20 per pound.
| a. | What is the break-even point in bags? (Round your answer to 2 decimal places.) |
| Break-even point | bags |
| b. | Calculate the profit or loss (EBIT) on 10,900 bags and on 27,000 bags. (Input all amounts as positive values. Round your answers to the nearest whole number.) |
| Bags | Profit/Loss | Amount |
| 10,900 | LossProfit | $ |
| 27,000 | (Click to select)LossProfit | $ |
| c. | What is the degree of operating leverage at 18,900 bags and at 27,000 bags? (Round your answers to 2 decimal places.) |
| Bags | Degree of Operating Leverage | ||
| 18,900 | |||
| 27,000 | |||
| d. | If Healthy Foods has an annual interest expense of $10,000, calculate the degree of financial leverage at both 18,900 and 27,000 bags. (Round your answers to 2 decimal places.) |
| Bags | Degree of Financial Leverage | ||
| 18,900 | |||
| 27,000 | |||
| e. | What is the degree of combined leverage at both 18,900 and 27,000 bags? (Round your answers to 2 decimal places.) |
| Bags | Degree of Combined Leverage |
| 18,900 | |
| 27,000 | |
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