Willamette Valley Fruit Company started as a small cannery-style operation in 1999. The com- pany now...

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Willamette Valley Fruit Company started as a small cannery-style operation in 1999. The com- pany now processes, on average, 20 million pounds of berries each year. Flash-frozen berries are sold in 30 pound packs to retailers. Assume 650,00 packs were sold for $75 each last year. Variable i costs were $42 per pack and fixed costs totaled $14,250,000. REQUIRED a. Prepare a contribution income statement for last year. b. Determine last year's operating leverage. C. Calculate the percentage change in profits if sales decrease by 10%. d. Management is considering the purchase of several new pieces of packaging equipment. This will increase annual fixed costs to $15,500,000 and reduce variable costs to $40 per crate. Calculate the effect of this acquisition on operating leverage and explain any change. Willamette Valley Fruit Company started as a small cannery-style operation in 1999. The com- pany now processes, on average, 20 million pounds of berries each year. Flash-frozen berries are sold in 30 pound packs to retailers. Assume 650,00 packs were sold for $75 each last year. Variable i costs were $42 per pack and fixed costs totaled $14,250,000. REQUIRED a. Prepare a contribution income statement for last year. b. Determine last year's operating leverage. C. Calculate the percentage change in profits if sales decrease by 10%. d. Management is considering the purchase of several new pieces of packaging equipment. This will increase annual fixed costs to $15,500,000 and reduce variable costs to $40 per crate. Calculate the effect of this acquisition on operating leverage and explain any change.

Answer rating: 100% (QA)

a Prepare a contribution income statement for last year The contribution income statement separates costs into variable and fixed components It helps ... View the full answer