Question

In: Finance

Mo’s Delicious Burgers Inc. sells food to university cafeterias for $45 a box. The fixed costs...

Mo’s Delicious Burgers Inc. sells food to university cafeterias for $45 a box. The fixed costs of this operation are $258,000, while the variable cost per box is $25.

a. What is the break-even point in boxes? (Do not round intermediate calculations.)

Break-even point boxes

b. Calculate the profit or loss on 12,000 boxes and 24,000 boxes. (Do not round intermediate calculations. Input all answers as positive values.)

Boxes	Profit/Loss	Amount
12,000	(Click to select) Loss Profit	$
24,000	(Click to select) Profit Loss	$

c-1. What is the DOL at 16,800 boxes and 27,000 boxes? (Round the final answers to 2 decimal places.)

Boxes	DOL
16,800	X
27,000	X

c-2. Not available in Connect.

d. If the firm has an annual interest payment of $11,500, calculate the DFL at both 16,800 and 27,000 boxes. (Round the final answers to 2 decimal places.)

Boxes	DFL
16,800	X
27,000	X

e. What is the DCL at both sales levels? (Round the final answers to 2 decimal places.)

Boxes	DCL
16,800	X
27,000	X

Expert Solution

a.

Break Even point = Fixed costs/ Contribution per unit

= 258000/(45-25)

= 258000 / 20

= 12900 boxes

* contribution = selling price - Variable cost

b.

Particulars	Boxes 12000	Boxes 24000
Selling price	45	45
Variable cost	25	25
Contribution	20	20
No of boxes	12000	24000
	240000	480000
Fixed Cost	258000	258000
Profit/Loss	-18000	222000

c

Particulars	Boxes 16800	Boxes 27000
Selling price	45	45
Variable cost	25	25
Contribution	20	20
No of boxes	16800	27000
Contribution margin (1)	336000	540000
Fixed Cost	258000	258000
Operating profit (2)	78000	282000
DOL (1/2)	4.31	1.91

d

Particulars	Boxes 16800	Boxes 27000
Selling price	45	45
Variable cost	25	25
Contribution	20	20
No of boxes	16800	27000
Contribution margin (1)	336000	540000
Fixed Cost	258000	258000
EBIT (1)	78000	282000
Interest	10600	10600
EBT (2)	67400	271400
DFL (1/2)	1.16	1.04

e

Particulars	Boxes 16800	Boxes 27000
DOL (1)	4.31	1.91
DFL (2)	1.16	1.04
*DCL (12)**	4.99	1.99

Pls do rate, if the answer is correct and comment, if any further assistance is required.

jeff jeffy answered 2 years ago

Mo’s Delicious Burgers Inc. sells food to university cafeterias for $41 a box. The fixed costs...

Mo’s Delicious Burgers Inc. sells food to university cafeterias for $41 a box. The fixed costs of this operation are $228,600, while the variable cost per box is $23. a. What is the break-even point in boxes? (Do not round intermediate calculations.) Break-even point boxes b. Calculate the profit or loss on 14,000 boxes and 28,000 boxes. (Do not round intermediate calculations. Input all answers as positive values.) Boxes Profit/Loss Amount 14,000 (Click to select) Profit Loss $ 28,000 (Click to...

Best Farm sells cat food and dog food. Its monthly fixed costs average $400,000. Cat food...

Best Farm sells cat food and dog food. Its monthly fixed costs average $400,000. Cat food sales represent 80% of the company's total revenue. Dog food sales constitute the remaining 20%. The company has provided the following information expressed on a per-case basis: Sales Conribution Conribution Sales Margin Price Margin Margin % Share % Mix Cat Food 50 15 Dog Food 30 6 Calculate: (show your calculations and round to 2 decimal places) What is the Average Contribution Margin Ratio?...

OceanGate sells external hard drives for $288 each. Its total fixed costs are $45 million, and...

OceanGate sells external hard drives for $288 each. Its total fixed costs are $45 million, and its variable costs per unit are $173. The corporate tax rate is 41%. If the economy is strong, the firm will sell 2 million drives, but if there is a recession, it will sell only half as many. a. What will be the percentage decline in sales if the economy enters a recession? (Negative value should be indicated by a minus sign. Round your...

Boards Inc. fabricates skateboards that the company sells for $ 37.50 each. Fixed costs for the...

Boards Inc. fabricates skateboards that the company sells for $ 37.50 each. Fixed costs for the last 12 months equaled $4,800. For the same period variable cost per unit equaled $22.50. Use the unit variable cost and sales price to calculate the unit contribution margin: 9120 Calculate the breakeven sales volume. BLANK-2 Calculate the sales volume necessary to produce a target Net Income of $3,000 per month. BLANK-3 The skateboards are manufactured in an old factory that relies heavily on...

Mod Inc. sells parts for $80 each. Fixed costs are $1,200 per year and variable costs...

Mod Inc. sells parts for $80 each. Fixed costs are $1,200 per year and variable costs are $65 per unit. If the initial investment is $6,600 and is expected to last for 5 years and the firm pays 35% taxes, what is the accounting and economic break-even level of sales respectively? The initial investment will be depreciated straight-line over 5 years to a final value of zero, and the discount rate is 12%.

Mod Inc. sells parts for $125 each. Fixed costs are $1,800 per year and variable costs...

Mod Inc. sells parts for $125 each. Fixed costs are $1,800 per year and variable costs are $80 per unit. If the initial investment is $10,000 and is expected to last for 8 years and the firm pays 35% taxes, what is the accounting and economic break-even level of sales respectively? The initial investment will be depreciated straight-line over 8 years to a final value of zero, and the discount rate is 12%.Please show all work!

Dallas Inc. sells a product for $62. Variable costs are 60% of sales, and monthly fixed...

Dallas Inc. sells a product for $62. Variable costs are 60% of sales, and monthly fixed costs are $58,776. a. What is the break-even point in units? (Do not round intermediate calculations.) b. What unit sales would be required to earn a target profit of $123,256? (Do not round intermediate calculations.) c. Assume they achieve the level of sales required in part b, what is the margin of safety in sales dollars? (Do not round intermediate calculations.)

Alternative A has fixed initial costs of $ X per year and variable costs of $45...

Alternative A has fixed initial costs of $ X per year and variable costs of $45 per unit. Alternative B has fixed costs $20,000 per year and variable costs of $30 per unit. Determine the value of X, if the breakeven quantity is 900. Assume there is no any other cost.

A rotational molding operation has fixed costs of $6,000 per year and variable costs of $45...

A rotational molding operation has fixed costs of $6,000 per year and variable costs of $45 per unit. If the process is automated via conveyor, its fixed cost will be $43,000 per year, but its variable cost will be only $10 per unit. Determine the number of units each year necessary for the two operations to break even. The number of units each year necessary for the two operations to break even is determined to be .

Identify Fixed and Variable Costs Intuit Inc. develops and sells software products for the personal finance...

Identify Fixed and Variable Costs Intuit Inc. develops and sells software products for the personal finance market, including popular titles such as Quickbooks® and TurboTax®. Classify each of the following costs and expenses for this company as either variable or fixed to the number of units produced and sold: a. Packaging costs Fixed b. Sales commissions Variable c. Property taxes on general offices d. Shipping expenses e. Straight-line depreciation of computer equipment f. President’s salary g. Salaries of software developers...