Could use some help on the income statement and breakeven point, but also need h

Question

Could use some help on the income statement and breakeven point, but also need help on the 1 & 2 questions.

Sunburst Veggies is a vertically-integrated company which both grows and processes organic vegetables. Ther company-grown vegetables are canned and then sold wholesale to grocery stores. The company began their operations in San Marcos, Texas in the mid-1990s and the corporate headquarters remain there. Sunburst grows a wide variety of organic (non-GMO) vegetables in greenhouses, some of which cover more than 200 acres. The vegetables are shipped from manufacturing facilities near the greenhouses. This assures the vegetables are processed as quickly as possible after being picked which inspired the company's marketing tag line: "fresh from the field." Consumer demand or organically grown vegetables has increased tremendously since Sunburst began operations. Gross revenues increased 500% since hey opened 0 years ago. The firm now has five greenhouses and processing plants in multiple locations near the following cities: Sacramento, California; San Marcos, Texas; Baton Rouge, Louisiana; Montgomery, Alabama; and Jacksonville, Florida. Their work force totals nearly 600 employees. Potential Sites: Sunburst is at maximum capacity in all locations and must add another greenhouse and processing plant in order to continuc their sales growth to new customers (and to assure they have no out-of-stock issues for existing customers). Both the greenhouse operations for growing the vegetables and the canning facility require large volumes of fresh water. It is essential to locate ncar an interstate highway because all shipments are shipped via semi-trucks. Two sites are being considered near the towns of Gulfport, Mississippi and Little Rock, Arkansas. Because of the extensive damage caused in Gulfport by Hurricane Katrina in August 2005 (and more recently by Hurricane Harvey), the cost of real estate in that area is significantly lower than in Little Rock. Estimated Operating Costs: Estimates of operating costs for the two locations are as follows: Gulfport Little Rock Life of greenhouse & processing plant Expected annual sales (# cases) Selling price (average per case) Variable costs (average per case) 50 years 300,000 $90 $60.00 50 years 300,000 S90 60.00 Fixed Costs (annual): S1,300,000 $445,000 655,000 $2.400,000 S1,500,000 $475,000 S655,000 Salaries & fringe benefits (labor is higher in LR Other fixed costs Total Fixed Costs

Explanation / Answer

Income statement

2. BREAK EVEN POINT = FIXED COST/PRICE-VARIABLE COST

GULFPORT = $2400000/ $90-$60 =80000 UNITS X $90 = $7200000

LITTLE ROCK = $2630000/$90-$60 = 87666 X $90 = $7889940

1. on the basis of qualitative data , gulfport site will be bettter alternative.

particulars gulfport little rock sales(300000 x $90) $27000000 $2700000 Less: variable cost(300000 x $60) $18000000 $18000000 contribution margin $9000000 $9000000 less: fixed cost $2400000 $2630000 net profit $6600000 $637000

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