Question: United Snack Company sells 50-pound bags of peanuts to university dormitories for $20 a bag. The fixed costs of this operation are $176,250, while the variable costs of peanuts are $.15 per pound. If United Snack Company has an annual interest expense of $15,000, calculate the degree of financial leverage at both 19,000 and 24,000 bags. (Round your answers to 2 decimal places.) What is the degree of combined leverage at both a sales level of 19,000 bags and 24,000 bags? (Round your answers to 2 decimal places.)
Question: United Snack Company sells 50-pound bags of peanuts to university dormitories for $20 a bag. The fixed costs of this operation are $176,250, while the variable costs of peanuts are $.15 per pound. If United Snack Company has an annual interest expense of $15,000, calculate the degree of financial leverage at both 19,000 and 24,000 bags. (Round your answers to 2 decimal places.) What is the degree of combined leverage at both a sales level of 19,000 bags and 24,000 bags? (Round your answers to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question:
United Snack Company sells 50-pound bags of
peanuts to university dormitories for $20 a bag.
The fixed costs of this operation are $176,250,
while the variable costs of peanuts are $.15 per
pound. If United Snack Company has an annual
interest expense of $15,000, calculate the degree
of financial leverage at both 19,000 and 24,000
bags. (Round your answers to 2 decimal places.)
What is the degree of combined leverage at both
a sales level of 19,000 bags and 24,000 bags?
(Round your answers to 2 decimal places.)
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