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 | ||||||||||||||
White | Fragrant | Loonzain | Total | |||||||||||
Percentage of total sales | 48% | 20% | 32% | 100% | ||||||||||
Sales | $ | 355,200 | 100% | $ | 148,000 | 100% | $ | 236,800 | 100% | $ | 740,000 | 100% | ||
Variable expenses | 106,560 | 30% | 118,400 | 80% | 130,240 | 55% | 355,200 | 48% | ||||||
Contribution margin | $ | 248,640 | 70% | $ | 29,600 | 20% | $ | 106,560 | 45% | 384,800 | 52% | |||
Fixed expenses | 227,240 | |||||||||||||
Net operating income | $ | 157,560 | ||||||||||||
Dollar sales to break even = |
Fixed expenses |
= |
$227,240 |
= $437,000 |
Unit CM | $0.52 |
As shown by these data, net operating income is budgeted at $157,560 for the month and break even sales at $437,000.
Assume that actual sales for the month total $740,000 as planned. Actual sales by product are: White, $236,800; Fragrant, $296,000; and Loonzain, $207,200.
Required:
1. Prepare a contribution format income statement for the month based on actual sales data.
Gold Star Rice, Ltd.Contribution Income StatementProduct
Product |
White |
Fragrant |
Loonzain |
Total |
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Percentage of total sales |
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|
|
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2. Compute the break-even point in dollar sales for the month based on your actual data. (Round your final answer to the nearest whole dollar.)
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1. Contribution format income statement based on actual sales data:
Product | ||||||||
White | Fragrant | Loonzain | Total | |||||
Percentage of total sales | 32% | 40% | 28% | 100% | ||||
Sales | 236,800.00 | 100% | 296,000.00 | 100% | 207,200.00 | 100% | 740,000.00 | 100% |
Variable expenses | 71,040.00 | 30% | 236,800.00 | 80% | 113,960.00 | 55% | 421,800.00 | 57% |
Contribution margin | 165,760.00 | 70% | 59,200.00 | 20% | 93,240.00 | 45% | 318,200.00 | 43% |
Fixed expenses | 227,240.00 | |||||||
Net operating income | 90,960.00 |
Calculations and explanations:
a. Percentage of total sales for White = actual sales of white/total sales = 236,800/740,000 = 32%. Similarly the percentages for fragrant and loonzain has been calculated.
b. From the budgeted income statement we can see that for White the variable expenses are 30% of sales. Thus actual variable expenses for White will be = 30% of actual sales = 30% of 236,800 = 71,040. Similarly variable expenses for fragrant and loonzian has been calculated.
c. Contribution margin for White = sales - variable expenses = 236,800-71,040 = 165,760. Similarly contribution margin for fragrant and loonzian has been calculated.
d. Total contribution margin = sum of contribution margin of white, fragrant and loonzian. Similarly total variable expenses has been calculated.
2. Break-even point in dollar sales = Fixed expenses/Contributon margin ratio
= 227,240/(100%-57%)
= 227,240/0.43
= $528,465
Gold Star Rice, Ltd., of Thailand exports Thai rice throughout Asia. The company grows three varieties...
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 $ 345,600 100 % $ 144,000 100 % $ 230,400 100 % $ 720,000 100 % Variable expenses 103,680 30 % 115,200 80 % 126,720 55 %...
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: Percentage of total sales Sales Variable expenses Contribution margin Fixed expenses Net operating income White 48% $ 316,800 95,040 $ 221,760 100 % 30% 70% Product Fragrant Loonzain 20 % 32 % $ 132,000 100 % $ 211,200 100 % 105,600 80% 116, 160 55...
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: Percentage of total sales Sales Variable expenses Contribution margin Fixed expenses Net operating income White 48 % $ 326,400 97,920 $ 228,480 Product Fragrant Loonzain 20 % 32 % 100 % $ 136,000 100 % $ 217,600 100 % 30 % 108,800 80% 119,680 55...
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 $ 297,600 100 % $ 124,000 100 % $ 198,400 100 % $ 620,000 100 % Variable expenses 89,280 30 % 99,200 80 % 109,120 55 %...
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 $ 316,800 100 % $ 132,000 100 % $ 211,200 100 % $ 660,000 100 % Variable expenses 95,040 30 % 105,600 80 % 116,160 55 %...
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: Percentage of total sales Sales Variable expenses Contribution margin Fixed expenses Net operating income White 48 $ 379,200 113,760 $ 265,440 100 % 30 % 70% Product Fragrant Loonzain 20 32% $ 158,000 100% $ 252,800 100% 126,400 B0% 139,040 55 $ 31,600 20 %...
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 20 % 52 % 28 % 100 % Sales $ 150,000 100 % $ 390,000 100 % $ 210,000 100 % $ 750,000 100 % Variable expenses 108,000 72 % 78,000 20 % 84,000 40 %...
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 %...
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 $ 379,200 100 % $ 158,000 100 % $ 252,800 100 % $ 790,000 100 % Variable expenses 113,760 30 % 126,400 80 % 139,040 55 %...
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 $ 374,400 100 % $ 156,000 100 % $ 249,600 100 % $ 780,000 100 % Variable expenses 112,320 30 % 124,800 80 % 137,280 55 %...