Gold Star Rice, Ltd., of Thailand exports Thai rice throughout Asia. The company
ID: 2517144 • Letter: G
Question
Gold Star Rice, Ltd., of Thailand exports Thai rice throughout Asia. The company grows three varieties of rice—Fragrant, White, and Loonzain. Budgeted sales by product and in total for the coming month are shown below:
Product
White
Fragrant
Loonzain
Total
Percentage of total sales
48%
20%
32%
100%
Sales
$
345,600
100%
$
144,000
100%
$
230,400
100%
$
720,000
100%
Variable expenses
103,680
30%
115,200
80%
126,720
55%
345,600
48%
Contribution margin
$
241,920
70%
$
28,800
20%
$
103,680
45%
374,400
52%
Fixed expenses
229,840
Net operating income
$
144,560
Dollar sales to break even =
Fixed expenses
=
$229,840
= $442,000
Unit CM
$0.52
As shown by these data, net operating income is budgeted at $144,560 for the month and break even sales at $442,000.
Assume that actual sales for the month total $720,000 as planned. Actual sales by product are: White, $230,400; Fragrant, $288,000; and Loonzain, $201,600.
Required:
1. Prepare a contribution format income statement for the month based on actual sales data.
Product
White
Fragrant
Loonzain
Total
Percentage of total sales
48%
20%
32%
100%
Sales
$
345,600
100%
$
144,000
100%
$
230,400
100%
$
720,000
100%
Variable expenses
103,680
30%
115,200
80%
126,720
55%
345,600
48%
Contribution margin
$
241,920
70%
$
28,800
20%
$
103,680
45%
374,400
52%
Fixed expenses
229,840
Net operating income
$
144,560
Gold Star Rice, Ltd. Contribution Income Statement Product Fragrant White Loonzain Total Percentage of total 2. Compute the break-even point in dollar sales for the month based on your actual data. (Round your final answer to the nearest whole dollar.) reak-even point in sales dollarsExplanation / Answer
1.
Gold Star Rice, Ltd.
Contribution Income Statement
2.
Breakeven point in sales dollars = Fixed costs / Contribution margin ratio
= 229,840 / 0.43
= 534,512
White White Fragrant Fragrant Loonzain Loonzain Total Total Percentage of total 32% 40% 28% 100% Sales 230,400 100% 288,000 100% 201,600 100% 720,000 100% Variable expenses 69,120 30% 230,400 80% 110,880 55% 410,400 57% Contribution margin 161,280 70% 57,600 20% 90,720 45% 309,600 43% Fixed expenses 229,840 Net operating income 79,760Related Questions
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