Healthy Foods

Healthy Foods, Inc., sells 50-pound bags of grapes to the military for $10 a bag. The fixed be of this operation be $80,000, while the variable costs of the grapes ar $.10 per pound. a. What is the break-even point in bags? Unit theatrical role rely (UCM) = wrong Variable Cost = $10 (50 × $0.10) = $10 - $5 = $5 BEP in bags = [pic][pic] = [pic] = 16,000 bags       b. Calculate the pull ahead or personnel casualty on 12,000 bags and on 25,000 bags. For 12,000 bags: gross gross sales ($10 × 12,000)$120,000 Less: Variable Costs ($0.10 × 50 × 12,000)$60,000 component part Margin$60,000 Less: Fixed Costs$80,000 lowest injustice$20,000 For 25,000 bags: Sales ($10 × 25,000)$250,000 Less: Variable Costs ($0.10 × 50 × 25,000)$125,000 Contribution Margin$125,000 Less: Fixed Costs$80,000 Net bread$45,000 c. What is the degree of operating leverage at 20,000 bags and at 25,000 bags? why does the degree of operatin g leverage change as the measurement sold increases? [pic] [pic] Leverage goes down because we are just out from the break-even point, thus the firm is operating on a big win base and leverage is reduced. d. If Healthy Foods has an yearbook disport expense of $10,000, calculate the degree of financial leverage at both 20,000 and 25,000 bags. a. First determine the profit or loss (EBIT) at 20,000 bags.

As indicated in part b, the profit (EBIT) at 25,000 bags is $45,000: | | | | ! |20,000 bags | | | | |Sales @ $10 per box |$200,000 | | |...If you want to view a full essay, order it on our website: OrderEssay.net

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