Question
Healthy Foods Inc. sells 50-pound bags of grapes to the military for $10 a bag. The fixed costs of this operation are $80,000, while the
Healthy Foods Inc. sells 50-pound bags of grapes to the military for $10 a bag. The fixed costs of this operation are $80,000, while the variable costs of grapes are $0.10 per pound.
c. What is the degree of operating leverage at 21,000 bags and at 35,000 bags? (Round your answers to 2 decimal places.)
d. If Healthy Foods has an annual interest expense of $6,000, calculate the degree of financial leverage at both 21,000 and 35,000 bags. (Round your answers to 2 decimal places.)
e. What is the degree of combined leverage at both 21,000 and 35,000 bags? (Round your answers to 2 decimal places.)
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