Question

Item 5 10 points 93 Item 5 Item 5 10 points Problem 5-12 Break-even point and degree of leverage [LO5-2, 5-5] Healthy Foods Inc. sells 60-pound bags of grapes to the military for $20 a bag. The fixed costs of this operation are $87,000, while the variable costs of grapes are $0.20 per pound. a. What is the break-even point in bags? (Round your answer to 2 decimal places.) b. Calculate the profit or loss (EBIT) on 9,000 bags and on 28,000 bags. c. What is the degree of operating leverage at 17,000 bags and at 28,000 bags? (Round your answers to 2 decimal places.) d. If Healthy Foods has an annual interest expense of $9,000, calculate the degree of financial leverage at both 17,000 and 28,000 bags. (Round your answers to 2 decimal places.) e. What is the degree of combined leverage at both 17,000 and 28,000 bags? (Round your answers to 2 decimal places.)

Answer 1

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ACCOUNTS latest - Microsoft Excel (Product Activation Failed) Formulas File Home Insert Page Layout Data Review View Add-Ins E AutoSum - Cut Wrap Text Calibri 11 General Copy Fill Merge & Center Insert Delete Format Paste В IU- 000 Conditional Format Cell Sort & Find & % Format Painter Clear Filter Select Formatting as Table Styles Alignment Clipboard Font Number Styles Cells Editing fox Y256 Q R S T V W X Y Z AА АВ AC AD АE 255 SP= 20 12 [0.20 x 60] 256 VC= 87000 257 FIXED COSTS = 258 FIXED COSTS/(SP-VC) 87000/(20-12) BREAKEVEN POINT = 259 260 BREAKEVEN POINT = 261 BREAKEVEN POINT= 10875.00 262 b 263 NO OF BAGS SOLD 9000 28000 264 265 SALES 180000 560000 266 VARIABLE COSTS 108000 336000 224000 267 CONTRIBUTION 72000 268 87000 87000 FIXED COSTS 269 ЕBIT -15000 137000 270 PROFIT/LOSS 271 BAGS AMOUNT 9000 loss 272 15000 PROFIT 273 28000 137000 budget VARIANCE ВЕР, OL FL SALES BUDGET DIFF ANALYSIS 130 % 45 days ROE, BV MV ratio DETROIT float B-S profit loss ove I cycle FIFO CASH BUDGET ratios dupont erences WA 10:15 TENG 30-10-2019 AB

ACCOUNTS latest - Microsoft Excel (Product Activation Failed) Formulas File Home Insert Page Layout Data Review View Add-Ins E AutoSum - Cut AC Wrap Text Calibri 11 General Copy Fill Merge & Center Insert Delete Format Paste В IU- 090 Conditional Format Cell Sort & Find & % Format Painter Clear Filter Select Formatting as Table Styles Clipboard Font Alignment Number Styles Cells Editing fox Z280 Q R S T U W X Y Z АА АВ AC AD АE 276 NO OF BAGS SOLD 17000 28000 277 SALES 340000 560000 336000 278 VARIABLE COSTS 204000 136000 279 CONTRIBUTION 224000 280 FIXED COSTS 87000 87000 281 EBIT 49000 137000 INTEREST 282 9000 9000 283 128000 ЕВT 40000 284 285 DEGREE OF OPERATING LEVERAGE C DOL CONTRIBUTION/EBIT 286 NO OF BAGS SOLD 2.78 [136000/49000] 1.64 [224000/137000] 287 17000 28000 288 289 d 290 DEGREE OF FINANCIAL LEVERAGE DFL EBIT/EBT 1.23 [49000/40000] 291 NO OF BAGS SOLD 17000 292 1.07 [137000/128000] 293 28000 294 budget SALES BUDGET DIFF ANALYSIS 130 % 45 days VARIANCE ВЕР, OL FL float B-S profit loss ove I cycle FIFO CASH BUDGET ROE, BV MV ratio ratios DETROIT dupont erences WA 10:16 TENG 30-10-2019

ACCOUNTS latest - Microsoft Excel (Product Activation Failed) Page Layout Formulas File Home Insert Data Review View Add-Ins E AutoSum - Cut Wrap Text Calibri 11 General Copy Fill Conditional Format Formatting as Table Styles Merge & Center Insert Delete Format Paste В IU- 000 Cell Sort & Find & % Format Painter Clear Filter Select Alignment Number Clipboard Font Styles Cells Editing fox Х301 Q R W Y Z AА АВ AC AD АE 284 285 DEGREE OF OPERATING LEVERAGE DOL CONTRIBUTION/EBIT NO OF BAGS SOLD 286 2.78 [136000/49000] 1.64 [224000/137000] 17000 287 288 28000 289 d 290 DEGREE OF FINANCIAL LEVERAGE DFL EBIT/EBT 291 NO OF BAGS SOLD 1.23 [49000/40000] 1.07 [137000/128000] 17000 292 28000 293 294 295 DEGREE OF COMBINED LEVERAGE e DCL CONTRIBUTION/EBT 296 NO OF BAGS SOLD 3.40 [136000/40000] 297 17000 1.75 [224000/128000] 298 28000 299 300 301 302 budget VARIANCE SALES BUDGET DIFF ANALYSIS 130 % 45 days ВЕР, OL FL float B-S profit loss ove I cycle ROE, BV MV ratio FIFO CASH BUDGET ratios DETROIT dupont erences WA 10:17 ENG 30-10-2019 AB