Assuming the answers for 1-4 are correct, calculate the answers for 5-11 below. Show all work and formulas.

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. Current annual sales revenue Current Variable costs Current Fixed costs totaled $2,000,000 35% of Sales $600,000 Sweet Grove is evaluating 2 independent strategies designed to enhance profitability. You need to refer to the original data above to evaluate these two independent strategies. Strategy #1. This strategy is to purchase more automated process equipment. This strategy would increase fixed costs by $100,000 This strategy would decrease variable costs to 25% of sales Strategy #2. This strategy is to outsource the fruit processing. This strategy would reduce fixed costs by This strategy would increase variable costs to $125,000 40% of sales Required: Answer the following questions below the question and use cell references to make your computations. 1. What is the current contribution margin ratio? $1,300,000 Contribution Margin= Sales-Variable Costs 65% Contribution Margin Ratio= (Contribution Margin / Sales) 2. What is the current break-even point in sales dollars? $923,077 BEP in $- Fixed Cost / Contribution Margin Ratio 3. Determine the margin of safety in sales dollars. $1,076,923 MOS in $ = Current Sales - Break Even Sales 4. Prepare a Contribution margin income statement for the current sales. Sales Less Variable costs Contribution margin Less Fixed costs Profit $2,000,000 $700,000 $1,300,000 $600,000 $700,000 5. Compute the degree of operating leverage. 10% of current sales level 6. If sales can increase by: What would be the percentage increase in profit? 7. Prepare a Contribution Margin income statement if sales increase 10% above current sales level. Sales Less Variable costs Contribution margin Less Fixed costs Profit 8. Proof the change in profit if there is an increase of 10% of sales revenue compared to the original profit. 9. What is the break-even point in sales dollars for strategy #1? 10. What is the break-even point in sales dollars for strategy #2? 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