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 grapes are $.10 per pound.
a. What is the break-even point in bags?
Break-Even Point _____ bags
b. Calculate the profit or loss (EBIT) on 12,000 bags and on 25,000 bags.
12,000: Profit/Loss _____Amount
25,000: Profit/Loss ______ Amount
c. What is the degree of operating leverage at 20,000 bags and at 25,000 bags? (Round your answers to 2 decimal places.)
20,000 _____
25,000_______
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. (Round your answers to 2 decimal places.)
20,000_____
25,000_____
e. What is the degree of combined leverage at both 20,000 and 25,000 bags? (Round your answers to 2 decimal places.)
20,000____
25,000_____