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—Fragrant, White, and Loonzain. Budgeted sales by product and in total for the coming month are shown below:

Product

Fixed expenses

$223,600

     As shown by these data, net operating income is budgeted at $114,400 for the month and break even sales at $430,000.

     Assume that actual sales for the month total $650,000 as planned. Actual sales by product are: White, $208,000; Fragrant, $260,000; and Loonzain, $182,000.

1a. Prepare a contribution format income statement for the month based on actual sales data.

1b. Compute the break-even point in dollar sales for the month based on your actual data.

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:

Explanation / Answer

(1a) contribution format income statement Product White Fragrant Loonzain Total Sales 208000 260000 182000 650000 Less: Variable Expenses 62400 208000 100100 370500 208000*0.30 260000*0.80 182000*0.55 Contribution 145600 52000 81900 279500 Less: Fixed expenses 223600 Net Operating Income 55900 (1b) the break-even point in dollar sales for the month based on your actual data Contibution Margin Ratio = Contribution /Sales =279500/650000 =0.43 Break even point in Dollar Sales = Fixed Expenses / Contribution margin ratio =$223600/0.43 =$520,000

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