/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} 13BP_e United Snack Company sells 50-po... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 2: 13BP_e (page 148)

United Snack Company sells 50-pound bags of peanuts to university dormitories for \(20 a bag. The fixed costs of this operation are \)176,250, while the variable costs of peanuts are $0.15 per pound.

e. What is the degree of combined leverage at both sales levels?

Short Answer

Expert verified

The combined leverage at 19,000 bags is 5.14 and at 24,000 bags is 2.76.

Step by step solution

01

Income statement at the sales volume of 19,000 bags and at 24,000 bags

Particulars

19,000 bags

24,000 bags

Sales

$380,000 (19,000 x $20)

$480,000 (24,000 x $20)

Less: variable cost

142,500 (19,000 x $7.50)

180,000 (24,000 x $7.5)

Contribution

$237,500

$300,000

Less: Fixed cost

176,250

176,250

EBIT

61,250

123,750

Less: Interest

15,000

15,000

EBT

$46,250

$108,750

02

Combined leverage at 19,000 bags

Combinedleverage=ContributionEBT=$237,500$46,250=5.14

03

Combined leverage at 24,000 bags

Combinedleverage=ContributionEBT=$300,000$108,750=2.76

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

The Haines Corp. shows the following financial data for 20X1 and 20X2:

20X1

20X2

Sales

\(3,230,000

\)3,370,000

Cost of goods sold

2,130,000

2,850,000

Gross profits

\(1,100,000

\)520,000

Selling and administrative expenses

298,000

227,000

Operating profits

\(802,000

\)293,000

Interest expense

47,200

51,600

Income before taxes

\(754,800

\)241,400

Taxes (35%)

264,180

84,490

Income after tax

\(490,620

\)156,910

For each year, compute the following and indicate whether it is increasing or

decreasing profitability in 20X2 as indicated by the ratio:

a. Cost of goods sold to sales.

Dr. Zhiva虁go Diagnostics Corp.鈥檚 income statement for 20X1 is as follows

Sales\( 2790000
Cost of goods sold1790000
Gross profits\) 1000000
Selling and administrative expenses302000
Operating profits\( 698000
Interest Expense54800
Income before tax\) 643200
Taxes 30%192960
Income after tax$ 450240

b. Assume that in 20X2, sales increase by 10 percent and cost of goods sold increases by 20 percent. The firm is able to keep all other expenses the same. Assume a tax rate of 30 percent on income before taxes. What is income after taxes and the profit margin for 20X2?

Given the following information, prepare an income statement for Jonas Brothers Cough Drops.

Selling and administrative expenses

$328,000

Depreciation expenses

195,000

Sales

1,660,000

Interest expenses

129,000

Cost of goods sold

560,000

Taxes

171,000

Easter Egg and Poultry Company has \(2,000,000 in assets and \)1,400,000 of debt. It reports net income of $200,000.

a. What is the firm鈥檚 return on assets?

If we divide users of ratios into short-term lenders, long-term lenders, andstockholders,which ratios would each group be most interested in, and for

what reasons?
See all solutions

Recommended explanations on Business Studies Textbooks

Business Development

Read Explanation

Intermediate Accounting

Read Explanation

Strategic Analysis

Read Explanation

Business Case Studies

Read Explanation

Managers

Read Explanation

Sales in Business

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.