Healthy Foods, Inc., sells 50 pounds bags of grapes to the military for $10.00 a bag. The fixed cost of this operation are $80,000, while the variable cost of the grapes are $10.00 per pound.
a. What is the breakeven 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 increase
d. If Healthy Foods has an annual interest expense of 10,000, calculate the degree of financial leverage at both the 20,000 and 25,000 bags
e. What is the degree of combined leverage at both sales level?
File name: Healthy-Foods-revised.doc File type: application/msword Price: $7
File name: Healthy-Foods-revised.doc File type: application/msword Price: $7
