Healty Foods Inc sells 50 lb bags of grapes to the military fo $10 a bag. The fixed costs of this operation are $80,000 while the variable costs of grapes are $.10 per lb.
A. What is the break-even point in bags?
B. Calculate the profit or loss on 12, 000 bags and on 25, 000
C. What is the degree of operating leverage at 20, 000 bags and at 25, 000? Why does the degree of operating leverage change as the quantity sold increase?
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
E. What is the degree of combined leverage at both sales levels?