Question 4 Partially correct Mark 1.00 out of 2.00 P Flag 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 $80 per crate, variable costs are $50 per crate, and fixed costs are $276,000 per year. In the year 2008, Florida Berry Basket sold 43,000 crates. (a) Prepare a contribution income statement for the year ended December 31, 2008. HINT: Use a negative sign with both "costs" answers. FLORIDA BERRY BASKET Income Statement For the Year Ended December 31, 2008 Sales $ 3,440,000 Variable costs (2,150,000) Contribution margin 40.625 x Fixed costs (276,000) Net income $ 1,014,000 (b) Determine the company's 2008 operating leverage. (Round your answer to two decimal places.) 15.54 X (c) Calculate the percentage change in profits if sales decrease by 10 percent. (Round your answer to one decimal place.) 15.54 X % decrease (d) Management is considering the purchase of several berry-picking machines. This will increase annual fixed costs to $376,000 and reduce variable costs to $47.50 per crate. Calculate the effect of this acquisition on operating leverage and explain any change. (Round your answer to two decimal places.) 15.54