FIN 200Axia College of University of Phoenix (UoP)Introduction to Finance: Harve

FIN 200Axia College of
University of Phoenix (UoP)Introduction to Finance: Harvesting the Money
TreeFin 200 Week 4 SolutionCheckPoint: Break-Even
AnalysisHealthy Foods Inc. sells 50-pound bags of grapes to
the military for $10 a bag. The fixed costs of this operation are $80000 while
the variable costs of the grapes are $.10 per pound.a. What is the
break-even point in bags?b. Calculate the profit or loss on 12000 bags and
on 25000 bags.c. What is the degree of operating leverage at 20000 bags
and at 25000 bags? Why does the degree of operating leverage change as the
quantity sold increases?d. If Healthy Foods has an annual interest expense
of $10000 calculate the degree of financial leverage at both 20000 and 25000
bags.e. What is the degree of combined leverage at both sales
levels?