Gold Star Rice, Ltd., of Thailand exports Thai rice throughout Asia. The company

Question

Gold Star Rice, Ltd., of Thailand exports Thai rice throughout Asia. The company grows three varieties of rice-White, Fragrant, and Loonzain. Budgeted sales by product and in total for the coming month are shown below Product White 48 % Fragrant 20% Loonzain 32 % Total 100 % Percentage of total sales Sales Variable expenses Contribution margin Fixed expenses $336,000 100% $140,000 100% $224,000 100% $700,000 100% 48 % 39% 78% $ 28,000 80% 20% $ 100,800 55 % 45 % 336,000 364,000 233,48o $ 130,520 100,800 $ 235,200 112,000 123,200 52 % Net operating income Fixed expenses CM ratio 233,480 0.52 Dollar sales to break-even - $449,000 As shown by these data, net operating income is budgeted at $130,520 for the month and the estimated break-even sales is $449.000 Assume that actual sales for the month total $700,000 as planned. Actual sales by product are: White, $224,000; Fragrant, $280,000; and Loonzain, $196,000. Required 1. Prepare a contribution format income statement for the month based on the actual sales data 2. Compute the break-even point in dollar sales for the month based on your actual data

Explanation / Answer

1.

2. Break-even point in dollar sales = Fixed expenses/Contribution margin ratio = $233480/0.43 = $542976.74

Note: Kindly round off the break-even point in dollar sales per instructions in requirement 2, if any, since the same has not been given with the question.

Gold Star Rice, Ltd. Contribution Income Statement Product White Fragrant Loonzain Total Percentage of total sales 32 % 40 % 28 % 100 % Sales 224000 100 % 280000 100 % 196000 100 % 700000 100 % Variable expenses 67200 30 % 224000 80 % 107800 55 % 399000 57 % Contribution margin 156800 70 % 56000 20 % 88200 45 % 301000 43 % Fixed expenses 233480 Net operating income 67520

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