Question
Healthy Foods Inc. sells 50-pound bags of grapes to the military for $15 a bag. The fixed costs of this operation are $85,000, while the
| Healthy Foods Inc. sells 50-pound bags of grapes to the military for $15 a bag. The fixed costs of this operation are $85,000, while the variable costs of grapes are $.10 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 10,000 bags and on 39,000 bags. (Input all amounts as positive values. Round your answers to the nearest whole number.) |
| Bags | Profit/Loss | Amount |
| 10,000 | (Click to select)LossProfit | $ |
| 39,000 | (Click to select)ProfitLoss | $ |
|
| ||
| c. | What is the degree of operating leverage at 19,000 bags and at 39,000 bags? (Round your answers to 2 decimal places.) |
| Bags | Degree of Operating Leverage | ||
| 19,000 | |||
| 39,000 | |||
|
| |||
| d. | If Healthy Foods has an annual interest expense of $8,000, calculate the degree of financial leverage at both 19,000 and 39,000 bags. (Round your answers to 2 decimal places.) |
| Bags | Degree of Financial Leverage | ||
| 19,000 | |||
| 39,000 | |||
|
| |||
| e. | What is the degree of combined leverage at both 19,000 and 39,000 bags? (Round your answers to 2 decimal places.) |
| Bags | Degree of Combined Leverage |
| 19,000 | |
| 39,000 | |
|
| |
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Ethics In Finance
Authors: John R. Boatright
3rd Edition
1118615824, 978-1118615829
