Gold Star Rice, Ltd, of Thailand exports Thai rice throughout Asia. The company
ID: 2556228 • Letter: G
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 belovw Product White 48% Fragrant 20% Loonzain 32 % Total 100 % Percentage of total sales Sales Variable expenses Contribution margin Fixed expenses Net operating income $292,800 100 % $122,000 100 % $195,200 100 % $610,000 100 % 87,840 38% 97,600 80% 107,368 55 % 292,800 48 % $204,960 70 % $24,400 20 % $87,840 45% 317,200 52 % 226, 200 $ 91,800 Dollar sales to break- Fixed expenses $226,200 CM ratio .5 -$435? even As shown by these data, net operating income is budgeted at $91,000 for the month and the estimated break-even sales is $435,000 Assume that actual sales for the month total $610,000 as planned. Actual sales by product are: White, $195,200, Fragrant, $244,000 and Loonzain, $170,800 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 dataExplanation / Answer
Answer to Question Number 1: Contribution format income statement for the month based on the actual sales data
Calculation for White
Sales = $195,200
Variable expense (30%) = $58,560
Therefore contribution margin = $136,640
Calculation for Fragrant
Sales = $244,000
Variable expense (80%) = $195,200
Therefore contribution margin = $48,800
Calculation for Loonzain
Sales = $170,800
Variable expense (55%) = $93,940
Therefore contribution margin = $76,860
Total sales from all the three products = $610,000
Total varaiable expense for all the three products = $347,700
Therefore total contribution margin from all the three products = $262,300
Answer to Question Number 2: Computing the break even point in dollar sales for the month based on the actual data
Contribution Margin ratio = $262,300/$610,000 = 43%
Dollar sales to break even = Fixed expense/CM ratio
= $226,200/0.43
= $526,046.51
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