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: $ Percentage of total sales Sales Variable expenses Contribution margin Fixed expenses Net operating income Fragrant 20% $ 146,000 116.800 $ 29,200 350, 400 100 % 105. 1200 245,280 70 100% Product Loontain 32 % 100 % $ 233,600 128,480 20 $ $ 105,120 100 55 45 Total 100 % 5 730,000 350.400 379,600 229,340 $ 149,760 $ 52 Dollar sales to break-even - Fixed expenses CM ratio $229,340 0.52 $442.000 As shown by these data, net operating income is budgeted at $149,760 for the month and the estimated break-even sales is $442.000 Assume that actual sales for the month total $730,000 as planned. Actual sales by product are: White, $233,600; Fragrant, $292.000: and Loonzain, $204.400.

Answer 1

Gold star rice Ltd.

Contribution income statement

Product

	White		Fragrant		Loonzain		Total
Percentage of total sales	32%		40%		28%		100%
Sales	233,600	100%	292,000	100%	204,400	100%	730,000	100%
Variable Expenses	70,080	30%	233,600	80%	112,420	55%	416,100	57%
Contribution margin	163,520	70%	58,400	20%	91,980	45%	313,900	43%
Fixed expenses							229,840
Net operating income							84,060

Breakeven point in dollar sales= fixed expenses/cm ratio

=229,840/43% =534,512

As shown actual sales net operating income is 84,060 for the month and the breakeven in sales is 534,512.