Answered step by step
Verified Expert Solution
Question
1 Approved Answer
United Snack Company sells 50-pound bags of peanuts to university dormitories for $44 a bag. The fixed costs of this operation are $381,250, while the
United Snack Company sells 50-pound bags of peanuts to university dormitories for $44 a bag. The fixed costs of this operation are $381,250, while the variable costs of peanuts are $0.27 per pound.
- What is the break-even point in bags?
- Calculate the profit or loss (EBIT) on 11,000 bags and on 24,000 bags.
- What is the degree of operating leverage at 19,000 bags and at 24,000 bags?
Note: Round your answers to 2 decimal places.
- If United Snack Company has an annual interest expense of $27,000, calculate the degree of financial leverage at both 19,000 and 24,000 bags.
Note: Round your answers to 2 decimal places.
- What is the degree of combined leverage at both a sales level of 19,000 bags and 24,000 bags?
Note: Round your answers to 2 decimal places.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started