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					Fragrant					Loonzain					Total
Percentage of total sales		48	%				20	%				32	%				100	%
Sales	$	326,400		100	%	$	136,000		100	%	$	217,600		100	%	$	680,000		100	%
Variable expenses		97,920		30	%		108,800		80	%		119,680		55	%		326,400		48	%
Contribution margin	$	228,480		70	%	$	27,200		20	%	$	97,920		45	%		353,600		52	%
Fixed expenses																	232,960
Net operating income																$	120,640

Dollar sales to break-even	=	Fixed expenses	=	$232,960	= $448,000
		CM ratio		0.52

As shown by these data, net operating income is budgeted at $120,640 for the month and the estimated break-even sales is $448,000.

Assume that actual sales for the month total $680,000 as planned. Actual sales by product are: White, $217,600; Fragrant, $272,000; and Loonzain, $190,400.

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.

Answer 1

Answer 1

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

	Product
	White		Fragrant		Loonzain		Total
	$	%	$	%	$	%	$	%
Percentage of total sales	32%		40 %		28 %		100 %
Sales	217,600	100	272,000	100	190,400.	100	680,000	100
Variable expenses	65,280	30	217,600	80	104,720	55	387,600	57
Contribution margin	152,320	70	54,400	20	85,680	45	292,400	43
Fixed expenses							232,960
Net operating income							59,440

Answer 2

Break-even point in dollar sales = Fixed Cost / Contribution margin % = 232,960 / 0.43 = $541,767