Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

any help with this would be greatly appreciated!! Part 1 Citrus company buys a variety of citrus fruit from growers and then processes the fruit

any help with this would be greatly appreciated!! image text in transcribed
image text in transcribed
image text in transcribed
Part 1 Citrus company buys a variety of citrus fruit from growers and then processes the fruit into a product line of fresh fruit, juices, and fruit flavorings The most recent years sales revenue was $4,000,000 Variable costs were 45% of Sales Fixed costs totaled $1,200,000 Sweet Grove is evaluating 2 strategies designed to enhance profitability ) Strategy #1. This strategy is to purchase more automated process equipment. This strategy would increase fixed costs by This strategy would decrease variable costs to $300,000 40% of sales i strategy #2. This strategy is to outsource the fruit processing This strategy would reduce fixed costs by 5 This strategy would increase variable costs to $300,000 60% of sales 8 Required: Answer the following questions below the question and use cell references to make your computations. 9 1. What is the current contribution margin ratio? 2 2. What is the current break-even point in sales dollars? 5 3. Determine the margin of safety in sales dollars. 6 Prepare a Contribution margin income statement for the recent sales. 9 Sales Less Variable costs Contribution margin Less Fixed costs 32 Profit 4 65. Compute the degree of operating leverage. 8 6. If sales can increase by: 39 What would be the percentage increase in profit? 10% of current sales level 40 417. Prepare a Contribution Margin income statement if sales increase 10% above current sales level. 42 43 Sales Less Variable costs Contribution margin Less Fixed costs 45 46 Profit 47 49-8. Proof the change in profit if there is an increase of 10% of sales revenue compared to the original profit 50 52.9. What is the break-even point in sales dollars for strategy #17 53 54 55 10, what is the break-even point in sales dollars for strategy #2? 56 8 11. Describe one strength and one weakness of both the automation and the outsourcing alternatives. Recommend to management which strategy you would recommend and why? recommen and whyn Strategy #1: Strength: Weakness: 5 Strategy #2: Strength 8 9 Weakness: 0 Recommendation: 72 73 74

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Social Media A Governance And Risk Guide

Authors: Peter R. Scott, J. Mike Jacka

1st Edition

1118061756, 978-1118061756

More Books

Students also viewed these Accounting questions