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 $ 312,000 100 % $ 130,000 100 % $ 208,000 100 % $ 650,000 100 % Variable expenses 93,600 30 % 104,000 80 % 114,400 55 % 312,000 48 % Contribution margin $ 218,400 70 % $ 26,000 20 % $ 93,600 45 % 338,000 52 % Fixed expenses 227,240 Net operating income $ 110,760 Dollar sales to break-even = Fixed expenses = $227,240 = $437,000 CM ratio 0.52 As shown by these data, net operating income is budgeted at $110,760 for the month and the estimated break-even sales is $437,000. 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. 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.

Compute the break-even point in dollar sales for the month based on your actual data. (Round your answer to the nearest whole dollar amount.)

Break-even point in dollar sales

Answer 1

1
	White		Fragrant		Loonzain		Total
Percentage of total sales		32%		40%		28%		100%
Sales	208000	100%	260000	100%	182000	100%	650000	100%
Variable expenses	62400	30%	208000	80%	100100	55%	370500	57%
Contribution margin	145600	70%	52000	20%	81900	45%	279500	43%
Fixed expenses							227240
Net operating income							52260
2
Dollar sales to break even	528465	=227240/43%