Break-Even Analysis Healthy Foods Inc. Product 60 -lbs bags Price $15.00 Per bag Fixed Costs $70,000 Variable Costs $0.15 Per lbs Annual Interest Exp $15,000
a. What is the break-even point in bags?
b. Calculate the profit or loss on 12,000 bags and 25,000 bags.
c. What is the degree of operating leverage at 20,000 bags and 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 20,000 and 25,000 bags.
e. What is the degree of combined leverage at both sales levels?
File name: Healthy-Foods-revised.doc File type: application/msword Price: $7
File name: Healthy-Foods-revised.doc File type: application/msword Price: $7
