Break-Even Analysis

Break-Even Analysis - 25,000-2.88 Why does the degree of...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
1. CheckPoint: Break-Even Analysis Complete Problem 13 on p. 144. 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? 16,000 b. Calculate the profit or loss on 12,000 bags and on 25,000 bags. 12,000- $(40,400) 25,000-$79,975.99 c. What is the degree of operating leverage at 20,000 bags and at 25,000 bags? 20,000-5.4
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 25,000-2.88 Why does the degree of operating leverage change as the quantity sold increases? More bags less DOL; less bags more DOL. 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?...
View Full Document

This note was uploaded on 06/25/2011 for the course FIN 200 taught by Professor Williams during the Winter '08 term at University of Phoenix.

Ask a homework question - tutors are online