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 $100 per crate, variable costs are $70 per crate, and fixed costs are $271,000 per year. In the year 2008, Florida Berry Basket sold 45,000 crates.

Prepare a contribution income statement for the year ended December 31, 2008.

Net income = $1,079,000

Explanation:

As per the data given in the question,

Income statement for year ended December 31,2008:

Particulars                                Value                         Workings

Sales                                     $4,500,000                  ($45,000 × $100)

Variable cost                        $3,150,000                   ($45,000 × $70)

Contribution margin            $1,350,000                   ($4,500,000 - $3,150,000)

Fixed cost                             $271,000

Net Income                          $1,079,000                     ($1,350,000 - $271,000)

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