Mo's 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.
a. What is the break-even point in boxes?
b. Calculate the profit or loss on 15,000 boxes and 30,000 boxes.
c. What is the DOL at 20,000 boxes and 30,000 boxes? Why does the DOL change as quantity sold increases?
d. If the firm has an annual interest payment of $10,000, calculate the DFL at both 20,000 and 30,000 boxes.
e. What is the DCL at both sales levels?