Healthy Foods Incorporated sells 60-pound bags of grapes to the military for $15 a bag. The fixed costs of this operation are $ while the variable costs of grapes are $0.15 per pound. a. What is the break-even point in bags? Note: Round your answer to 2 decimal places. Break-even point b. Calculate the profit or loss (EBIT) on 11,000 bags and on 32,000 bags. Bags 11,000 15,000.00 bags Profit/Loss Amount

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Healthy Foods Incorporated sells 60-pound bags of grapes to the military for $15 a bag. The fixed costs of this operation are $90,000,
while the variable costs of grapes are $0.15 per pound.
a. What is the break-even point in bags?
Note: Round your answer to 2 decimal places.
Break-even point
b. Calculate the profit or loss (EBIT) on 11,000 bags and on 32,000 bags.
Bags
11,000
32,000
Bags
19,000
32,000
c. What is the degree of operating
erage at 19,000 bags and at 32,000 bags?
Note: Round your answers to 2 decimal places.
Bags
19,000
32,000
Profit/Loss
d. If Healthy Foods has an annual interest expense of $14,000, calculate the degree of financial leverage at both 19,000 and 32,000
bags.
Note: Round your answers to 2 decimal places.
Bags
Degree of Operating
Leverage
19,000
32.000
15,000.00 bags
Degree of Financial
Leverage
Amount
e. What is the degree of combined leverage at both 19,000 and 32,000 bags?
Note: Round your answers to 2 decimal places.
Degree of Combined
Leverage
Transcribed Image Text:Healthy Foods Incorporated sells 60-pound bags of grapes to the military for $15 a bag. The fixed costs of this operation are $90,000, while the variable costs of grapes are $0.15 per pound. a. What is the break-even point in bags? Note: Round your answer to 2 decimal places. Break-even point b. Calculate the profit or loss (EBIT) on 11,000 bags and on 32,000 bags. Bags 11,000 32,000 Bags 19,000 32,000 c. What is the degree of operating erage at 19,000 bags and at 32,000 bags? Note: Round your answers to 2 decimal places. Bags 19,000 32,000 Profit/Loss d. If Healthy Foods has an annual interest expense of $14,000, calculate the degree of financial leverage at both 19,000 and 32,000 bags. Note: Round your answers to 2 decimal places. Bags Degree of Operating Leverage 19,000 32.000 15,000.00 bags Degree of Financial Leverage Amount e. What is the degree of combined leverage at both 19,000 and 32,000 bags? Note: Round your answers to 2 decimal places. Degree of Combined Leverage
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