Gold Star Rice, Limited, 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 $ 336,000 100% $ 140,000 100% $ 224,000 100% $ 700,000 100% Variable expenses 100,800 30% 112,000 80% 123,200 55% 336,000 48% Contribution margin $ 235,200 70% $ 28,000 20% $ 100,800 45% 364,000 52% Fixed expenses 230,880 Net operating income $ 133,120 Dollar sales to break-even = Fixed expenses / CM ratio = $230,880 / 0.52 = $444,000 As shown by these data, net operating income is budgeted at $133,120 for the month and the estimated break-even sales is $444,000. Assume that actual sales for the month total $700,000 as planned; however, actual sales by product are: White, $224,000; Fragrant, $280,000; and Loonzain, $196,000. 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.
Gold Star Rice, Limited, 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 $ 336,000 100% $ 140,000 100% $ 224,000 100% $ 700,000 100% Variable expenses 100,800 30% 112,000 80% 123,200 55% 336,000 48% Contribution margin $ 235,200 70% $ 28,000 20% $ 100,800 45% 364,000 52% Fixed expenses 230,880 Net operating income $ 133,120 Dollar sales to break-even = Fixed expenses / CM ratio = $230,880 / 0.52 = $444,000 As shown by these data, net operating income is budgeted at $133,120 for the month and the estimated break-even sales is $444,000. Assume that actual sales for the month total $700,000 as planned; however, actual sales by product are: White, $224,000; Fragrant, $280,000; and Loonzain, $196,000. 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Gold Star Rice, Limited, 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 | $ 336,000 | 100% | $ 140,000 | 100% | $ 224,000 | 100% | $ 700,000 | 100% |
| Variable expenses | 100,800 | 30% | 112,000 | 80% | 123,200 | 55% | 336,000 | 48% |
| Contribution margin | $ 235,200 | 70% | $ 28,000 | 20% | $ 100,800 | 45% | 364,000 | 52% |
| Fixed expenses | 230,880 | |||||||
| Net operating income | $ 133,120 |
Dollar sales to break-even = Fixed expenses / CM ratio = $230,880 / 0.52 = $444,000
As shown by these data, net operating income is budgeted at $133,120 for the month and the estimated break-even sales is $444,000.
Assume that actual sales for the month total $700,000 as planned; however, actual sales by product are: White, $224,000; Fragrant, $280,000; and Loonzain, $196,000.
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.
Transcribed Image Text:Prepare a contribution format income statement for the month based on the actual sales data.
Gold Star Rice, Limited
Contribution Income Statement
Percentage of total sales
White
%
%
%
%
Fragrant
%
Product
%
%
%
< Required 1
Loonzain
%
%
%
%
Required 2 >
Total
%
%
%
%
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