Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Healthy Foods Inc. sells 50-pound bags of grapes to the military for $16 a bag. The fixed costs of this operation are $90,000, while the

image text in transcribedimage text in transcribedimage text in transcribed

Healthy Foods Inc. sells 50-pound bags of grapes to the military for $16 a bag. The fixed costs of this operation are $90,000, while the variable costs of grapes are $0.20 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 12,000 bags and on 34,000 bags. Profit/Loss Amount Bags 12,000 34,000 c. What is the degree of operating leverage at 20,000 bags and at 34,000 bags? (Round your answers to 2 decimal places.) Bags Degree of Operating Leverage 20,000 34,000 d. If Healthy Foods has an annual interest expense of $13,000, calculate the degree of financial leverage at both 20,000 and 34,000 bags. (Round your answers to 2 decimal places.) Bags Degree of Financial Leverage 20,000 34,000 e. What is the degree of combined leverage at both 20,000 and 34,000 bags? (Round your answers to 2 decimal places.) Bags Degree of Combined Leverage 20,000 34.000 International Data Systems' information on revenue and costs is relevant only up to a sales volume of 114,000 units. After 114,000 units, the market becomes saturated and the price per unit falls from $14.00 to $8.80. Also, there are cost overruns at a production volume of over 114,000 units, and variable cost per unit goes up from $7.00 to $7.25. Fixed costs remain the same at $64,000. a. Compute operating income at 114,000 units. Operating income b. Compute operating income at 214,000 units. Operating income

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The 3 Signal The Investing Technique That Will Change Your Life

Authors: Jason Kelly

1st Edition

0142180955, 978-0142180952

More Books

Students also viewed these Finance questions