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 Total 100 8 Fragrant Loonzain Percentage of total sales Sales Variable expenses Contribution margin Fixed expenses Net operating income 32 % 20 100% $126,000 100,800 70% $ 25,200 100% $630,000 302,400 327,600 226,720 $ 100,880 $ 302,400 90,720 211,680 100% $ 201,600 110,880 20% $ 90,720 55 % 45 % 100% 48 % 80 % 52 % Fixed expenses CM ratio $226,720 0.52 Dollar sales to break-even - $436, 000 As shown by these data, net operating income is budgeted at $100,880 for the month and the estimated break-even sales is $436,000 Assume that actual sales for the month total $630,000 as planned. Actual sales by product are: White, $201,600; Fragrant, $252,000; and Loonzain, $176,400 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

White Fragrant Loonzain Total Percentage of total sales 32% 40% 28% 100% Sales 201600 100.00% 252000 100.00% 176400 100.00% 630000 100.00% Variable expenses 60480 30.00% 201600 80.00% 97020 55.00% 359100 57.00% Contribution margin 141120 70.00% 50400 20.00% 79380 45.00% 270900 43.00% Fixed expenses 226720 Net operating income 44180 2 Break-even point in dollar sales=226720/43%= $527256

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