Question

Gold Star Rice, Ltd. of Thailand exports Thal 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: White 48 $ 374,400 112,320 $ 262,080 Percentage of total sales Sales Variable expenses Contribution margin Fixed expenses Net operating income Product Fragrant Loonzain 20 32 100# $ 156,000 100 $ 249,600 100 30 124,800 80 137,280 558 70# $ 31,200 20 $ 112,320 455 100 Total 100 $ 780,000 374,400 405,600 232,440 $ 173, 160 528 es Dollar sales to break-even Fixed expenses CM ratio $ 232,440 0.52 - $447,000 As shown by these data, net operating income is budgeted at $173,160 for the month and the estimated break-even sales is $447,000. Assume that actual sales for the month total $780,000 as planned; however, 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2

Answer 1

Contribution income statement

	White	Fragrant	Loonzain	Total
Percentage of total sales	$249,600/$780,000	32%	$312,000/$780,000	40%	$218,400/$780,000	28%	$780,000	100%
Sales	$249,600	100%	$312,000	100%	$218,400	100%	$780,000	100%
Variable Cost	$ 74,880	30%	$249,600	80%	$120,120	55%	$444,600	57%
Contribution Margin	$174,720	70%	$ 62,400	20%	$ 98,280	45%	$335,400	43%
Fixed Cost				$232,440
Operating Income				$102,960

2)

Break even dollar on actual sales

Fixed cost/CM Ratio

= $232,440/.43

= $540,558