Compute the degree of operating leverage

Assignment Help Finance Basics
Reference no: EM1364561

Moe & Chris' Delicious Burgers, Inc., sells food to University Cafeterias for $15 a box. The fixed costs of this operation are $80,000, while the variable cost per box is $10.

Questions:
a. What is the break-even point in boxes?
b. Calculate the profit or loss on 15,000 boxes and on 30,000 boxes.
c. What is the degree of operating leverage at 20,000 boxes and at 30,000 boxes? Why does the degree of operating leverage change as the quantity sold increases?
d. If the firm has an annual interest expense of $10,000, calculate the degree of financial leverage at both 20,000 and 30,000 boxes.
e. What is the degree of combined leverage at both sales levels?

 

Reference no: EM1364561

Questions Cloud

Calculate the proportion of debt financing for a firm : Calculate the proportion of debt financing for a firm that expects a 24 percent return on equity, a 16 percent return on assets, and a 12% return on debt?
Potential obstacles to establishing change : Explain what potential obstacles do you face in establishing urgency for change within your organization and how might you circumvent these obstacles
Successful professional sport : "Soccer has not become a widely successful professional sport because it isn't American enough." Discuss the accuracy of this statement in light of information from this unit and then explain whether you agree with it or not.
Which currency euro or the yen would you consider riskier : Suppose the dollar exchange rates of the euro and the yen are equally variable. Which currency, the euro or the yen, would you consider riskier.
Compute the degree of operating leverage : Moe & Chris' Delicious Burgers, Corporation., sells food to University Cafeterias for $15 a box. The fixed costs of this operation are $80,000, and variable cost per box is $10.
Sports sociology-youth training : A privately-owned commercial gymnastics club in your town has had much success in producing outstanding female gymnasts as young as ten years old. The girls at the club practice at least 25 hours a week and often compete on weekends.
How has logistics management changed over the past years : How has logistics management changed over the past years? Why has the importance of logistics management been growing over the past few decades?
Which job affords you the highest purchasing power : If you have been offered $137,000 for a job in Los Angeles and $117,000 for a similar job in Dallas, which job affords you the highest purchasing power of the bundle of goods in the price index.
Write an application to calculate the factorials : Write an application that calculates the factorials of 1 through 20. use type long. Display the results in tabular format. What difficulty might prevent you from calculating the factorial of 100?

Reviews

Write a Review

 

Finance Basics Questions & Answers

  Find the return on investment

Pisa has not performed spectacularly to date. However, it wishes to issue new shares to obtain $100,000 to finance an expansion into a promising market.

  Explain behavioral phenomena

On May 20, 2004, The Wall Street Journal ran a front page story entitled "Biotech's Dismal Bottom Line: More Than $40 Billion in Losses. " The article makes many points.

  Determine effective borrowing rate

Determine effective borrowing rate for a 1-year line of credit, if the total credit line = $3,000,000, average loan outstanding = $1,400,000, commitment fee = 0.5 percent on the unused portion,

  Bond - precentage change

Consider an American bond with an effective duration (which is pretty much the same as modified duration, but more precise) of 6.76 years having a yield to maturity of 7% and interest rates are expected to rise by 50 basis points.

  What will the cash flows for this project be

The firm has a tax rate of 30 percent, an opportunity cost of capital of 0 percent, and it expects net working capital to increase by $93,000.00 at the beginning of the project.

  Dupont formula for southwest airlines

Briefly discuss the impact of the changes in asset turnover and financial leverage on ROE over the the three years.

  Explain the dilemma faced by company

Pullman, Corporation, a United State firm, has been highly profitable, but prefers not to pay out higher dividends because its shareholders want the funds to be reinvested.

  Clarification of ratio analysis

Average Weighted Cost of Capital, Risk Premium, debt to equity and the Current assets of GPC Genuine Parts Company for the most recent 5 years.

  United-continental airline merger

Research United and Continental Airline merger, measure the challenges experienced during the merger and resulting impact to the business.

  Compute the cost of borrowing by using debt

Based on information given above, compute the cost of borrowing by using debt for present company.

  Organization initiative impact costs

Dell a leading computer technology organization has established a high ethical standard of doing business with customers, vendors, stakeholders, suppliers and shareholders.

  Calculate total variable costs of the project

A firm is reviewing a project with labor cost of dollar 9.90 per unit, raw materials cost of $22.63 a unit, and fixed costs of dollar 8,000 a month. Sales are projected at 10,000 units over the three-month life of the project.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd