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Break-Even Analysis

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

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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
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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?...
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