Mo & Chris\'s Delicious Burgers, Inc., sells food to Military Cafeterias for $29
ID: 2653228 • Letter: M
Question
Mo & Chris's Delicious Burgers, Inc., sells food to Military Cafeterias for $29 a box. The fixed costs of this operation are $132,000, while the variable cost per box is $17.
What is the break-even point in boxes?
Calculate the profit or loss on 14,000 boxes and on 29,500 boxes. (Input all amounts as positive values. Omit the "$" sign in your response.)
What is the degree of operating leverage at 13,000 boxes and at 29,500 boxes? (Enter only numeric value rounded to 2 decimal places.)
If the firm has an annual interest expense of $10,700, calculate the degree of financial leverage at both 13,000 and 29,500 boxes.(Enter only numeric value rounded to 2 decimal places.)
What is the degree of combined leverage at both sales levels? (Enter only numeric value rounded to 2 decimal places.)
Mo & Chris's Delicious Burgers, Inc., sells food to Military Cafeterias for $29 a box. The fixed costs of this operation are $132,000, while the variable cost per box is $17.
Explanation / Answer
a) Particulars Amount Selling price per unit 29.00 Variable cost per unit 17.00 Contribution per unit 12.00 Fixed Costs 132,000.00 BEP in Boxes = Fixed Costs /Cont'n per unit BEP in Boxes = 132,000/12 BEP in Boxes = 11,000 b) Particulars Amount for 14000 boxes Amount for 29,500 boxes Units 14,000.00 29,500.00 Contribution per unit 12.00 12.00 Total Contribution 168,000.00 354,000.00 Fixed Costs 132,000.00 132,000.00 Net Income 36,000.00 222,000.00 c) Particulars Amount for 13000 boxes Amount for 29,500 boxes Units 13,000.00 29,500.00 Contribution per unit 12.00 12.00 Total Contribution 156,000.00 354,000.00 Fixed Costs 132,000.00 132,000.00 Net Income or EBIT 24,000.00 222,000.00 DOL = Contribution/EBIT 6.50 1.59 d) Particulars Amount for 13000 boxes Amount for 29,500 boxes Units 13,000.00 29,500.00 Contribution per unit 12.00 12.00 Total Contribution 156,000.00 354,000.00 Fixed Costs 132,000.00 132,000.00 EBIT 24,000.00 222,000.00 Interest Expense 10,700.00 10,700.00 EBT 121,300.00 121,300.00 DFL = EBIT/EBT 0.1979 1.8302 e) DCL = DOL*DFL 1.29 2.92