1. United Snack Company sells 50-pound bags of peanuts to university dormitories for $38 a bag....

United Snack Company sells 50-pound bags of peanuts to university dormitories for $38 a bag. The fixed costs of this operation are $390,000, while the variable costs of peanuts are $0.24 per pound.

a. What is the break-even point in bags?

b. Calculate the profit or loss (EBIT) on 6,000 bags and on 19,000 bags.

Bags	Degree of Financial Leverage
6,000
19,000

c. What is the degree of operating leverage at 18,000 bags and at 23,000 bags? (Round your answers to 2 decimal places.)

Bags	Degree of Financial Leverage
18,000
23,000

d. If United Snack Company has an annual interest expense of $24,000, calculate the degree of financial leverage at both 18,000 and 23,000 bags. (Round your answers to 2 decimal places.)

Bags	Degree of Financial Leverage
18,000
23,000

e. What is the degree of combined leverage at both a sales level of 18,000 bags and 23,000 bags? (Round your answers to 2 decimal places.)

Bags	Degree of Financial Leverage
18,000
23,000

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Expert Solution

jeff jeffy answered 1 month ago

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