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Healthy Foods, Inc., sells 50-pound bags of grapes to the military for $10 a bag.

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Healthy Foods, Inc., sells 50-pound bags of grapes to the military for $10 a bag.;The fixed costs of this operation are $80,000, while the variable costs of the grapes are $.10 per pound.;a. What is the break-even point in bags?;b. Calculate the profit or loss on 12,000 bags and on 25,000 bags.;c. What is the degree of operating leverage at 20,000 bags and at 25,000 bags?;Why does the degree of operating leverage change as the quantity sold;increases?;d. If Healthy Foods has an annual interest expense of $10,000, calculate the degree of financial leverage at both 20,000 and 25,000 bags.;e. What is the degree of combined leverage at both sales levels?

 

Paper#33058 | Written in 18-Jul-2015

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