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 $ 350,400 100 % $ 146,000 100 % $ 233,600 100 % $ 730,000 100 % Variable expenses 105,120 30 % 116,800 80 % 128,480 55 % 350,400 48 % Contribution margin $ 245,280 70 % $ 29,200 20 % $ 105,120 45 % 379,600 52 % Fixed expenses 225,680 Net operating income $ 153,920 Dollar sales to break-even = Fixed expenses = $225,680 = $434,000 CM ratio 0.52 As shown by these data, net operating income is budgeted at $153,920 for the month and the estimated break-even sales is $434,000. 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. 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.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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 $ 350,400 100 % $ 146,000 100 % $ 233,600 100 % $ 730,000 100 %
Variable expenses 105,120 30 % 116,800 80 % 128,480 55 % 350,400 48 %
Contribution margin $ 245,280 70 % $ 29,200 20 % $ 105,120 45 % 379,600 52 %
Fixed expenses 225,680
Net operating income $ 153,920
Dollar sales to break-even = Fixed expenses = $225,680 = $434,000
CM ratio 0.52
As shown by these data, net operating income is budgeted at $153,920 for the month and the estimated break-even sales is $434,000.
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.
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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