Question:United Snack Company sells 50-pound bags ofpeanuts to university dormitories for $20 a bag.The fixed costs of this operation are $176,250,while the variable costs of peanuts are $.15 perpound. If United Snack Company has an annualinterest expense of $15,000, calculate the degreeof financial leverage at both 19,000 and 24,000bags. (Round your answers to 2 decimal places.)What is the degree of combined leverage at botha sales level of 19,000 bags and 24,000 bags?(Round your answers to 2 decimal places.)

To solve this, we'll calculate the degree of financial leverage (DFL) and degree of combined…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Data for Hermann Corporation are shown below: (See image attached) Fixed expenses are $87,000 per month and the company is selling 2,900 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,200 and monthly sales increase by $20,250? 1-b. Should the advertising budget be increased?
Q1: Shannon's brewery currently boasts a customer base of 1,750 customers that frequent the brewhouse on average twice per month and spend $26 per visit. Shannon 's current variable cost of goods sold is 50% of sales. The customer retention rate per month is 0.78, based on data collected from its website and an analysis of credit card receipts. Its current cost of capital for borrowing and investing is about 12% per year, or 1% per month. What is Shannon's approximate CLV for its average customer? Compute your answer to the nearest penny.
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↑ Suppose River Valley Lodge incurs $70,000 of fixed costs each month Compute the (a) total fixed cost and (b) fixed cost per guest if the hotel has 14,000 guests next month. Compare the fixed cost per guest at the higher occupancy rate to the fixed cost per guest when only 1,500 guests stay during the month. (a) Compute the total fixed cost if the hotel has 14,000 guests next month. Total fixed costs to wide changes in volume, therefore, total fixed costs will (b) Compute the fixed cost per guest if the hotel has 14,000 guests next month. First, identify the formula to compute the fixed cost per guest, then compute the foxed cost per guest at (1) 14,000 guests and at (2) 1.500 guests (Round the fixed cost per quest to the nearest cent.) Fixed cost per quest Next
Wild-Water Works Water Park provides for a fun day by offering a variety of rides. Wild-Water Works Water Park sells tickets at $79 per person as a one-day entrance fee. Variable costs per person are $33 and fixed cost amount to $131,000 per month.Wild-Water Works Water Park expects to sell 7,300 tickets. Estimate the operating income if sales increase by 15%.Calculate the degree of operating leverage.(Round your answers to two decimal places when needed and use rounded answers for all future calculations.)
1. Find a franchisee's breakeven sales in dollars. 2. Is franchising a good idea for Wong if franchisees want a minimum monthly operating income of $7,000 and Wong believes that most locations could generate $26,000 in monthly sales?
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Golden Gate Novelties (GGN) sells souvenir key chains at the local airport. GGN charges $12.00 per chain. The variable cost for a chain, including the wholesale cost of the chain, packaging, the commission paid to the airport operator, and so on, is $10.40. The annual fixed cost for GGN is $15,000. Required: a. How many cases must Golden Gate Novelties sell every year to break even? Note: Do not round intermediate calculations. b. The owner of GGN believes that the company can sell 12,500 chains a year. What is the margin of safety in terms of the number of chains? a. Break-even point b. Margin of safety chains chains
4. Nestle Ltd. It produces its premium plant food in 50 Kg bags. Demand is 100,000 Kgs. per week and the plant operates 52 weeks each year. Nestle can produce 250,000 Kgs. per week. The setup cost is OMR 200 and the annual holding cost rate is OMR 0.40 per bag. What will the optimal duration of the downtime in years ? a.None is correct b. 0.076 c. 0.069 d. 0.721 e. 0.065 O f. 0.502
The company BAC inc. sells a single product for $ 5 a unit. Its annual fixed operating costs are estimated at $ 180,000 including $ 30,000 in depreciation. Its unit variable cost is estimated at $ 2. The amount of interest paid annually to bondholders is $ 45,000. The corporate tax rate is 35%.a) Estimate the general breakeven point of the business?b) Estimate the company's cash flow breakeven point?c) Estimate the operating leverage of the business at a sales level ofd) 120,000 units?e) Estimate the company's financial leverage for an EBIT of $ 50,000?f) Estimate the total leverage of the business at a sales level of 80,000 units?
Bark and Bliss Limited is a pet supply company headquartered in Edmonton, Alberta. They have four different lines of business. Here is an excerpt of their financial statements for the December 31, 2020 fiscal year: Dog Walking Brick & Division Online Shop Pet Training & Pet Care Mortar Stores Sales $4 22,500,000 13,980,000 27,630,500 5,407,000 Net operating income $4 1,250,000 1,840,000 2,845,200 1,134,750 Average operating assets $4 7,580,000 8,275,000 14,500,000 5,250,000 Bark and Bliss Limited has a policy that all investments must have a rate of return of at least 15%. Required: a. What is the return on investment for each of Bark and Bliss' four lines of business? Round your calculations to one decimal place. b. If the Online Store division was able to reduce its operating expenses by $57,000, what would be its new return Ati Go to on investment?

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