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.
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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Transcribed Image Text: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
Percentage of total sales
Sales
White
48%
Fragrant
20%
Variable expenses
Contribution margin
Fixed expenses
Net operating income
$ 345,600
103,680
$ 241,920
100%
30%
$ 144,000
115,200
100%
80%
70%
$ 28,800
20%
Loonzain
32%
$ 230,400
126,720
$ 103,680
Total
100%
100%
55%
$ 720,000
345,600
100%
48%
45%
374,400
52%
227,760
$146,640
Dollar sales to break-even - Fixed expenses - CM ratio = $227,760-0.52 = $438,000
As shown by these data, net operating income is budgeted at $146,640 for the month and the estimated break-even sales is
$438,000.
Assume actual sales for the month total $720,000 as planned, however, actual sales by product are White, $230,400, Fragrant,
$288,000, and Loonzain, $201,600.
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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