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 $ 384,000 100% $ 160,000 100% $ 256,000 100% $ 800,000 100% Variable expenses 115,200 30% 128,000 80% 140,800 55% 384,000 48% Contribution margin $ 268,800 70% $ 32,000 20% $ 115,200 45% 416,000 52% Fixed expenses 224,640 Net operating income $ 191,360 Dollar sales to break-even = Fixed expenses / CM ratio = $224,640 / 0.52 = $432,000 As shown by these data, net operating income is budgeted at $191,360 for the month and the estimated break-even sales is $432,000. Assume that actual sales for the month total $800,000 as planned; however, actual sales by product are: White, $256,000; Fragrant, $320,000; and Loonzain, $224,000. 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 $ 384,000 100% $ 160,000 100% $ 256,000 100% $ 800,000 100% Variable expenses 115,200 30% 128,000 80% 140,800 55% 384,000 48% Contribution margin $ 268,800 70% $ 32,000 20% $ 115,200 45% 416,000 52% Fixed expenses 224,640 Net operating income $ 191,360 Dollar sales to break-even = Fixed expenses / CM ratio = $224,640 / 0.52 = $432,000 As shown by these data, net operating income is budgeted at $191,360 for the month and the estimated break-even sales is $432,000. Assume that actual sales for the month total $800,000 as planned; however, actual sales by product are: White, $256,000; Fragrant, $320,000; and Loonzain, $224,000. 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 | $ 384,000 | 100% | $ 160,000 | 100% | $ 256,000 | 100% | $ 800,000 | 100% |
| Variable expenses | 115,200 | 30% | 128,000 | 80% | 140,800 | 55% | 384,000 | 48% |
| Contribution margin | $ 268,800 | 70% | $ 32,000 | 20% | $ 115,200 | 45% | 416,000 | 52% |
| Fixed expenses | 224,640 | |||||||
| Net operating income | $ 191,360 |
Dollar sales to break-even = Fixed expenses / CM ratio = $224,640 / 0.52 = $432,000
As shown by these data, net operating income is budgeted at $191,360 for the month and the estimated break-even sales is $432,000.
Assume that actual sales for the month total $800,000 as planned; however, actual sales by product are: White, $256,000; Fragrant, $320,000; and Loonzain, $224,000.
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.
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