Question

Contribution Income Statement and Operating Leverage Florida Berry Basket harvests early-season strawberries for shipment throughout the eastern United States in March. The strawberry farm is maintained by a permanent staff of 10 employees and seasonal workers who pick and pack the strawberries. The strawberries are sold in crates containing 100 individually packaged one-quart containers. Affixed to each one-quart container is the distinctive Florida Berry Basket logo inviting buyers to "Enjoy the berry best strawberries in the world!" The selling price is $100 per crate, variable costs are $70 per crate, and fixed costs are $271,000 per year. In the year 2008, Florida Berry Basket sold 45,000 crates.

Prepare a contribution income statement for the year ended December 31, 2008.

Answer 1

Contribution margin = $1,350,000

Net Income = $1,079,000

Step-by-step explanation:

Sales = 45,000 * $100 = $4,500,000

Variable cost = 45,000 * $70 = $3,150,000

Fixed cost = $271,000

Florida Berry Basket

Contribution Income Statement

For the year ended December 31, 2008

Details Amount ($)

Sales 4,500,000

Variable cost (3,150,000)

Contribution margin 1,350,000

Fixed cost (271,000)

Net Income 1,079,000

Answer 2

Net income = $1,079,000

Step-by-step explanation:

As per the data given in the question,

Income statement for year ended December 31,2008:

Particulars Value Workings

Sales $4,500,000 ($45,000 × $100)

Variable cost $3,150,000 ($45,000 × $70)

Contribution margin $1,350,000 ($4,500,000 - $3,150,000)

Fixed cost $271,000

Net Income $1,079,000 ($1,350,000 - $271,000)