break even analysis
posted by marie on .
13. Healthy Foods, Inc., sells 50pound 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 breakeven point in bags?

Profit=costs
10/50 * n=80000+.1n where n is number of pounds. n will have to be a multiple of 50 the way the bags are made.
.2n.1n=80000
n= 800,000 lbs. 
16,000 bags

what is the degree of operating leaverage at 20,000 bags and at 25,000 bags

The degree of operating leverage at 20,000 bags and at 25,000 bags
DOL = (Quantity x (Selling Price  Variable Cost))/((Quantity x (Selling Price  Variable Cost)) Fixed Cost)
DOL (20,000) = (20,000*(105))/(((20,000*(105))80,000) = 5 times
DOL (25,000) = (25,000*(105))/(((25,000*(105))80,000) = 2.78 times