Healthy food Inc sells 50lb bags of grapes to the military for $10 a bag.

Question

The fixed costs of this operation are $80,000 while the variable costs of the grapes are $10 per lb.

1. what us the break even point
2. what is the degree of combined leverage at both sales levels.

Answer 1

2. What two sales levels are you refering to?

As for part 1, there must be s mistake somewhere. Is it $10 per lb (as you state) or $10 per bag? Or less? You will never make a profit selling 50lb bags for $10, if the variable cost is $10 per lb ($500 per bag).

Answer 2

For question number 2 the teacher states operating leverage and financial leverage but that is it I am totally confused? Thanks for the help