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	$	374,400		100	%	$	156,000		100	%	$	249,600		100	%	$	780,000		100	%
Variable expenses		112,320		30	%		124,800		80	%		137,280		55	%		374,400		48	%
Contribution margin	$	262,080		70	%	$	31,200		20	%	$	112,320		45	%		405,600		52	%
Fixed expenses																	229,320
Net operating income																$	176,280

Dollar sales to break-even	=	Fixed expenses	=	$229,320	= $441,000
		CM ratio		0.52

As shown by these data, net operating income is budgeted at $176,280 for the month and the estimated break-even sales is $441,000.

Assume that actual sales for the month total $780,000 as planned. Actual sales by product are: White, $249,600; Fragrant, $312,000; and Loonzain, $218,400.

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

1)			White		Fragrant		loonzain		total
	percentage of total sales		32%		40%		28%
	Sales		249,600	100%	312,000	100%	218,400	100%	780,000	100%
	Variable expense		74880	30%	249600	80%	120120	55%	444600	57%
	contribution margin		174720	70%	62400	20%	98280	45%	335400	43%
	Fixed expenses								229,320
	net operating income								106,080
2)	Break even point in dollar sales				533302
	Fixed expense/cm ratio
	229320/43%
	533302.3