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	$	316,800		100	%	$	132,000		100	%	$	211,200		100	%	$	660,000		100	%
Variable expenses		95,040		30	%		105,600		80	%		116,160		55	%		316,800		48	%
Contribution margin	$	221,760		70	%	$	26,400		20	%	$	95,040		45	%		343,200		52	%
Fixed expenses																	231,920
Net operating income																$	111,280

Dollar sales to break-even	=	Fixed expenses	=	$231,920	= $446,000
		CM ratio		0.52

As shown by these data, net operating income is budgeted at $111,280 for the month and the estimated break-even sales is $446,000.

Assume that actual sales for the month total $660,000 as planned. Actual sales by product are: White, $211,200; Fragrant, $264,000; and Loonzain, $184,800.

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

Percentage of Total Sales Sale Variabel Expenses Contribution Margin Fixed Cost Net operating Income Contribution Margin Income Statement Products white Fragrant Loonzain T 32% 40% ] 290% 28% 211200 100% 264000 100% 184800 100% 63360 30% 211200 80% 101640 55% 1478401 70% 52800| 20% 83160| 45% Total Total 100% 660000 376200 283800 2319201 51880 100.0% 57.0% 43.0% Break Even in Dollar Sales = Fixed Cost / CM Ratio = (231920/0.43) 539349