Question
Break Even Analysis Healthy Foods Inc.
Product 50 lb. bags
Price $12.50 Per bag
Fixed Costs $68,000
Variable Costs $0.15 Per lb.
Annual Interest Exp $7,500
a. What is the break-even point in bags?
b. Calculate the profit or loss on 12,000 bags and 25,000 bags.
c. What is the degree of operating leverage at 20,000 bags and
25,000 bags? Why does the degree of operating leverage
change as the quantity sold increases?
d. If Healthy Foods has an annual interest expense
Product 50 lb. bags
Price $12.50 Per bag
Fixed Costs $68,000
Variable Costs $0.15 Per lb.
Annual Interest Exp $7,500
a. What is the break-even point in bags?
b. Calculate the profit or loss on 12,000 bags and 25,000 bags.
c. What is the degree of operating leverage at 20,000 bags and
25,000 bags? Why does the degree of operating leverage
change as the quantity sold increases?
d. If Healthy Foods has an annual interest expense