break-even+analysis+checkpoint - PAGE144(13)

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PAGE 144 (13) 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 of loss on 12,000 bags and on 25,000 bags. c. what is 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.  a. what is the break-even point in bags    Break-even point = Fixed cost/unit contribution margin  unit contribution margin = selling price per unit - variable cost per unit  = $10 - (50 x 0.10)  = 10 - 5  = $5 Breakeven point = 80,000/5  = 16,000 bags
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This note was uploaded on 01/27/2010 for the course FIN 200 taught by Professor Bresett during the Spring '10 term at University of Arizona- Tucson.

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break-even+analysis+checkpoint - PAGE144(13)

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