Calculate the degree of financial leverage

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United Snack Company sells 40-pound bags of peanuts to university dormitories for $60 a bag. The fixed costs of this operation are $671,600, while the variable costs of peanuts are $0.35 per pound.

Question 1: Whats the break-even point in bags ?

Question 2: Calculate the profit or loss (EBIT) on 11,000 bags and 24,000 bags.

Question 3: What is the degree of operating leverage at 19,000 bags and at 24,000 bags. (Round your answers to 2 decimal places)

Question 4: If United snack company had an annual interest expense of $35,000, calculate the degree of financial leverage at both 19,000 and 24,000 bags.

Question 5: What is the degree of combined leverage at both levels of 19,000 bags and 24,000 bags .

Reference no: EM132534963

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