devry marketing 303

devry marketing 303 - A. The break-even point in bags of...

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A. The break-even point in bags of salads is $10 – (50 x $0.10) = $10 - $5 = $5 BEP = FC/P-VC = $80,000/$5 = 16,000 bags B. Profit or loss for 12,000 and 25,000 bags a. Sales ($10 x 12,000) = $120,000 Less: Variable Costs ($0.10 x 50 x 12,000) = $60,000 Contribution Margin = $60,000 Less: Fixed Costs = $80,000 Net Loss = $20,000 b. Sales ($10 x 25,000) = $250,000 Less: Variable Costs = ($0.10 x 50 x 25,000) $125,000 Contribution Margin = $125,000 Less: Fixed Costs = $80,000 Net Loss = $45,000 C. DOL (20,000) = Q(P-VC)/Q(P-VC) – FC = $20,000($10-$5)/20,000($10-$5) - $80,000 = $20,000($5)/$20,000($5) - $80,000 = $100,000/$20,000 = $5.00x DOL (25,000) = Q(P-VC)/Q(P-VC) – FC = $25,000($10-$5)/25,000($10-$5) - $80,000 = $25,000($5)/$25,000($5) - $80,000 = $125,000/$45,000 = $2.78x Leverage is less due to the higher profit and a decreased need for loans and additional debt; the higher the profit, the lesser the leverage. D.
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This note was uploaded on 12/05/2010 for the course BUS 303 taught by Professor Rapisardi during the Spring '10 term at DeVry Long Beach.

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devry marketing 303 - A. The break-even point in bags of...

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