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Operating leverage is the extent of which fixed cost are used in a firm's operations. Is there a risk of having both high operating leverage and high financial leverage?

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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?
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b. Calculate the profit or loss on 12,000 bags and on 25,000 bags. 12,000 x \$10 = 120,000 80,000 + .10 x 50lbs x 12,000 = 80,000 + 60,000 = 140,000 120,000 – 140,000 = -20,000 loss 25,000 x \$10 = 250,000 80,000 + .10 x 50lb x 25000 …
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