Question
United Snack Company sells 60-pound bags of peanuts to university dormitories for $16 a bag. The fixed costs of this operation are $106,600, while the
United Snack Company sells 60-pound bags of peanuts to university dormitories for $16 a bag. The fixed costs of this operation are $106,600, while the variable costs of peanuts are $0.13 per pound. |
(a) | What is the break-even point in bags? |
Break-even point | bags |
(b) | Calculate the profit or loss on 9,000 bags and on 22,000 bags. (Input all amounts as positive values. Omit the "$" sign in your response.) |
Bags | Profit/Loss | Amount |
9,000 | (Click to select)ProfitLoss | $ |
22,000 | (Click to select)LossProfit | $ |
(c) | What is the degree of operating leverage at 17,000 bags and at 22,000 bags? (Enter only numeric value rounded to 2 decimal places.) |
Bags | Degree of operating leverage | |
17,000 | ||
22,000 | ||
(d) | If United Snack Company has an annual interest expense of $13,000, calculate the degree of financial leverage at both 17,000 and 22,000 bags. (Enter only numeric value rounded to 2 decimal places.) |
Bags | Degree of financial leverage | ||
17,000 | |||
22,000 | |||
(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 | |
17,000 | ||
22,000 |
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