Problem 5-13 Break-even point and degree of leverage [LO2, 5]

United Snack Company sells 50-pound bags of peanuts to university dormitories for $26 a bag. The fixed costs of this operation are $244,800, while the variable costs of peanuts are $0.18 per pound.

(a)	What is the break-even point in bags?

Break-even point

bags

(b)	Calculate the profit or loss on 12,000 bags and on 25,000 bags. (Input all amounts as positive values. Omit the "$" sign in your response.)

Bags	Profit/Loss	Amount
12,000	(Click to select)LossProfit	$
25,000	(Click to select)LossProfit	$

(c)	What is the degree of operating leverage at 20,000 bags and at 25,000 bags? (Enter only numeric value rounded to 2 decimal places.)

Bags	Degree of operating leverage
20,000
25,000

(d)	If United Snack Company has an annual interest expense of $18,000, calculate the degree of financial leverage at both 20,000 and 25,000 bags. (Enter only numeric value rounded to 2 decimal places.)

Bags	Degree of financial leverage
20,000
25,000

(e)	What is the degree of combined leverage at both sales levels? (Enter only numeric value rounded to 2 decimal places.)

Bags	Degree of combined leverage
20,000
25,000