Question:United Snack Company sells 50-pound bags ofpeanuts to university dormitories for $20 a bag.The fixed costs of this operation are $176,250,while the variable costs of peanuts are $.15 perpound. If United Snack Company has an annualinterest expense of $15,000, calculate the degreeof financial leverage at both 19,000 and 24,000bags. (Round your answers to 2 decimal places.)What is the degree of combined leverage at botha sales level of 19,000 bags and 24,000 bags?(Round your answers to 2 decimal places.)

To solve this, we'll calculate the degree of financial leverage (DFL) and degree of combined…

Answered: Question: United Snack Company sells…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Callie Corporation’s products sell for $180 each. The variable cost of each product is $135, and fixed operating costs are $371,250. Callie pays $61,875 interest on its outstanding debt each year, and its marginal tax rate is 40 percent. If Callie expects to sell 11,000 units, what is its degree of operating leverage (DOL), its degree of financial leverage (DFL), and its degree of total leverage (DTL)? The firm has no preferred stock.
Boom Company has sales volume of 70,000 units with a unit selling price of $120 per unit. The variable expenses are $80 per unit, and the total fixed expenses are $2,100,000. 15. What is the degree of operating leverage? * 2.00 3.00 4.00 5.00 None of the above 16. If the sales volume increases by 15%, and all other items are the same, what will be the effect on the net operating income? * The net operating income will increase by $420,000 The net operating income will increase by $700,000 The net operating income will increase by $1,120,000 The net operating income will increase by $2,800,000 None of the above O O O
Wild-Water Works Water Park provides for a fun day by offering a variety of rides. Wild-Water Works Water Park sells tickets at $79 per person as a one-day entrance fee. Variable costs per person are $33 and fixed cost amount to $131,000 per month.Wild-Water Works Water Park expects to sell 7,300 tickets. Estimate the operating income if sales increase by 15%.Calculate the degree of operating leverage.(Round your answers to two decimal places when needed and use rounded answers for all future calculations.)
Xeta Inc., sells a box for $15 each. The box have a variable cost of $4 per unit, and the products' fixed operating costs are at $220,000 per year. The company's capital structure includes 55% debt and 45% equity. Annual interest expense is $25,000, and the corporate tax rate is 35%. 1.Calculate the break-even point in units. 2.If it sells 25,000 units, calculate the firm's EBIT and net income.
Azure laptops has a manufacturing plant operating at full capacity has the sales of 3,000,000 for the year 2021. variable cost of the plant= 1,500,000. Fixed cost for the plant=750,000 8% debt amount=2,000,000 Equity capital =5,500,000 Find Azure laptops financial leverage for the year 2021.
Golden Gate Novelties (GGN) sells souvenir key chains at the local airport. GGN charges $12.00 per chain. The variable cost for a chain, including the wholesale cost of the chain, packaging, the commission paid to the airport operator, and so on, is $10.40. The annual fixed cost for GGN is $15,000. Required: a. How many cases must Golden Gate Novelties sell every year to break even? Note: Do not round intermediate calculations. b. The owner of GGN believes that the company can sell 12,500 chains a year. What is the margin of safety in terms of the number of chains? a. Break-even point b. Margin of safety chains chains
The Warren Watch Compony sells watches for $25, fixed Costs are $170,000, and variable costs are $15 per watch! watchili 1 ngay 20 a) What is the firm's gain or loss at sales st. of 10,000 watches & Loss, if any, should be indicated by a minus sign. Round your answer to the nearest cent. $ NOM MAX 250 Seb(2 Bek What is the firm's gain or loss at sales of 18,000 watches? Loss, if any, should be indicated by a minus sign. Round your answer to the nearest cent. ( st b) What is the break-even point Cunit sales)? Round your answer to the nearest whole number. Slow EHMNY 2.3
Rancor Electronics sells 5,000 mp3 players and earns Tk.2.5 million in revenues. Rancor’s variable costs are Tk.600,000 and its fixed operating costs are Tk.1.52 million. How many mp3 players does Rancor have to sell recover all its operational costs? Can Rancor earn a larger increase in operating income by making a smaller increase in sales? Suppose Rancor has Tk.1 million in debts at a 10 percent rate of interest and is subject 38 percent tax rate. How many mp3 players will Rancor have to sell in order attain its financial breakeven point?
None
Firms in Japan often employ both high operating and financial leverage because of the use of modern technology and close borrower–lender relationships. Assume the Mitaka Company has a sales volume of 146,000 units at a price of $26 per unit; variable costs are $6 per unit, and fixed costs are $2,010,000. Interest expense is $421,000. What is the degree of combined leverage for this Japanese firm? (Round your answer to 2 decimal places.)

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