# fin. am I correct?

13. 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?

\$80,000 = \$80,000 = 80,808 units
\$10.00 - \$0.10 \$9.90

b. Calculate the profit or loss on 12,000 bags and on 25,000 bags.

12,000 Bags 25,000 Bags
Sales x price per unit 120,000 250,000
Less: Fixed costs 80,000 80,000
Less: Variable cost x per unit 8089 8089
Profit (Loss) 31,911 161,911

Work for 12,000 Bags Work for 25,000 Bags
12,000 x 10= 120,000 25,000 x 10 = 250,000
120,000-80,000 = 40,000 250,000- 80,000 = 170,000
80,808 x .10 = 8089 80,808 x .10 = 8089
40,000-8089= 31,911 170,000 -8089 = 161,911

c. What is the degree of operating leverage at 20,000 bags and at 25,000 bags?

20,000 bags DOL = 4.6 25,000 bags DOL = 5.0

Why does the degree of operating leverage change as the quantity sold
Increases?

20,000 + 80,808= 100,808 25,000 + 80,808 = 105,808
100,808 -80,000 = 20,808 105, 808 -80,000 = 25,808

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.

20,000 bags x \$10 = 200,000 - \$10,000 = 190,000 – 80,000 = 110,000
25,000 bags x \$10 = 250,000 - \$10,000 = 240,000 – 80,000 = 160,000

e. What is the degree of combined leverage at both sales levels?
DCL = % Change in EPS
% Change in Sales

1. 👍 0
2. 👎 0
3. 👁 155

## Similar Questions

1. ### Math

A store buys 77 1/2 pounds of mulch in a large shipment. They divide the mulch up into bags that can each hold 2 1/4 pounds. The store sells one bag of mulch for \$2.25. for each part of the question, show your work. a. How many

2. ### Math

Mr. Rodriguez is packing bags of snacks for his children’s lunchboxes. If he has 20 blueberries and 30 grapes, what is the maximum number of bags of snacks that he can pack so that each bag has the same number of blueberries and

3. ### Algebra

A landscaping company sells 40-pound bags of top soil. The actual weight x of a bag, however, may differ from the advertised weight by as much as 0.75 pound. Write an inequality involving absolute value that expresses the

4. ### algebra

The manager of a bulk foods establishment sells a trail mix for \$6 per pound and premium cashews for \$13 per pound. The manager wishes to make a 315-pound mixture that will sell for \$8 per pound. How many pounds of each should be

1. ### Programming

using c++ write a program that accepts the unit weight of a bag of coffee in pounds and the number of bags sold and display the number of bags sold ,the weight per bag price per pound sales tax and total price of the sale.the unit

2. ### Math

A store buys 77 1/2 pounds of mulch in a large shipment. They divided the mulch up into bags that can each hold 2 1/4 pounds of mulch. The store sells one bag of mulch for \$2.25. How many full bags of mulch will the store make?

3. ### Math

Johns house is 12 miles away from school. He is 2/3 a way from home. How many miles has he walked? A.8 B.16 C.18 D.24 Jill bought a 9-pound bag of cat food for her cats. She has used 4/5 of the bag. How many pounds has she used

4. ### INB

13. 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

1. ### Math

On an average day, 34 customers buy a bag of grapes at Jerry's Market. There are an average of 47 grapes in each bag. Round to the nearest ten and then multiply to estimate the number of grapes Jerry's customers buy every day.

2. ### stats

Buckley Farms produces homemade potato chips that it sells in bags labeled 16 ounces. The total weight of each bag follows an approximately normal distribution with a mean of 16.15 ounces and a standard deviation of 0.12 ounces.

3. ### math

Chad buys peanuts in 2-pound bags. He repackages them into bags that hold 5/6 pound of peanuts. How many 2-pound bags of peanuts should Chad buy so that he can fill the 5/6-pound bags without having any peanuts left over?

4. ### Math

The owner of an organic fruit stand also sells nuts. She wants to mix cashews worth \$5.50 per pound with peanuts worth \$2.30 per pound to get a 1/2 pound mixture that is worth \$2.80 per pound. How much of each kind of nut should