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	$	297,600		100	%	$	124,000		100	%	$	198,400		100	%	$	620,000		100	%
Variable expenses		89,280		30	%		99,200		80	%		109,120		55	%		297,600		48	%
Contribution margin	$	208,320		70	%	$	24,800		20	%	$	89,280		45	%		322,400		52	%
Fixed expenses																	229,320
Net operating income																$	93,080

Dollar sales to break-even	=	Fixed expenses	=	$229,320	= $441,000
		CM ratio		0.52

As shown by these data, net operating income is budgeted at $93,080 for the month and the estimated break-even sales is $441,000.

Assume that actual sales for the month total $620,000 as planned. Actual sales by product are: White, $198,400; Fragrant, $248,000; and Loonzain, $173,600.

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.

Answer 1

1
	White		Fragrant		Loonzain		Total
Percentage of total sales		32%		40%		28%		100%
Sales	198400	100%	248000	100%	173600	100%	620000	100%
Variable expenses	59520	30%	198400	80%	95480	55%	353400	57%
Contribution margin	138880	70%	49600	20%	78120	45%	266600	43%
Fixed expenses							229320
Net operating income							37280
2
Dollar sales to break even	533302	=229320/43%