Break Even Analysis

13. lusty Foods, Inc., sells 50-pound bags of grapes to the military for $10 a bag. The fixed be of this operation argon $80,000, sequence the shifting approachs of the grapes argon $.10 per pound. a. What is the break-even point in bags? stiff costs $80,000 80,000 = 16,000 Bags Contribution marge 10-5 5 b. Calculate the profit or loss on 12,000 bags and on 25,000 bags. 12,000 Bags: 12,000 x $10 (cost per bag) = 120,000 120,000- 80,000 (fixed cost) = 40,000 variable amount cost = 12,000 x $5 (variable cost per bag) = 60,000 40,000-60,000 = -20,000 Loss of $20,000 25,000 Bags: 25,000 x $10 (cost per bag) = 250,000 250,000- 80,000 (fixed cost) = 170,000 Variable cost = 25,000 x $5 ( variable cost per bag) =125,000 170,000-125,000 = 45,000 Profit of $45,000 c. What is the distributor point of operating concomitant at 20,000 bags and at 25,000 bags? why does the form of operating supplement change as the quantity sold increases? 20,000 bags: undertaking= 20,000(5) = 100,000 = 5 (20,000 x 5) 80,000 20,000 lying-in = 5 25,000 bags: proletariat= 25,000(5) = 125,000 = 2.8 (25,000 x 5) 80,000 45,000 DOL= 2.

8 The spot of operating supplement changes because the company is increasing or diminish in profit. As the profit increases, the leverage decreases. d. If Healthy Foods has an annual interest write down of $10,000, calculate the degree of monetary leverage at twain 20,000 and 25,000 bags. 20,000 bags: 200,000- 80,000 (fixed cost)- 100,000 (variable cost)= $20,000 DFL= 20,000 = 2 20,000 10,000 DFL= 2 25,000 bags: DFL= 45,000 = 1.29 45,000 10,000 DFL=1.29 e. What is the degree of combined leverage at both sales levels? DCL= DOL x DFL 20,000 Bags: DCL= 5 x 2= 10 DCL= 10 25,000 BagsDCL= 2.8 x 1.29= 3.61 DCL= 3.61If you want to get a adept essay, order it on our website: Orderessay

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