Organic Growers Provide organic oranges for restaurants in the local area. The income for last year follows

Fantastic news! We've Found the answer you've been seeking!

Question:

Organic Growers Provide organic oranges for restaurants in the local area. The income for last year follows (based on sales of 40,000 cases):

Revenue" $400,000, Costs: Wages for pickers and packers $200,000, Packing materials $40,000, Lease of land and growing costs $50,000, Admin and selling $95,000, Inspection wages $10,000, Pretax income $5,000, Income taxes @30% $3,000, After -Tax income $2,000.

Pickers, packers and inspectors are employed on an hourly basis and can be laid off whenever necessary. Salespeople mostly deliver the product and are paid on a salaried basis.

REQUIRED: Use the CVP

A. What is the cost function for organic Growers?

B. What is the Breakeven point for this business?

C. What sales volume would be necessary for an after-tax profit of $5,000?

D. The manager believes that he can raise and sell 5,000 cases next year. Estimate after-tax profits at that level of sales.

E. Over the last several years 4,000 cases of oranges have been grown and sold. What does this information suggest about th equality of information you calculated for part (d)?

F. Describe reasons why the cost function you developed for sales of 4,000 cases might not hold for sales of 5,000 cases.