United Snack Company sells 40-pound bags of peanuts to university dormitories for $30 a bag. The fixed costs of this operation are $321,200, while the variable costs of peanuts are $0.20 per pound.
a. What is the break-even point in bags?
b. Calculate the profit or loss (EBIT) on 10,000 bags and on 23,000 bags.
10,000 ____
23,000_____
c. What is the degree of operating leverage at 18,000 bags and at 23,000 bags? (Round your answers to 2 decimal places.)
18,000 ____
23,000____
d. If United Snack Company has an annual interest expense of $20,000, calculate the degree of financial leverage at both 18,000 and 23,000 bags. (Round your answers to 2 decimal places.)
18,000 _____
23,000______
e. What is the degree of combined leverage at both a sales level of 18,000 bags and 23,000 bags? (Round your answers to 2 decimal places.)
18,000 ____
23,000 _____