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 20 % 52 % 28 % 100 % Sales $150,000 100 % $390,000 100 % $ 210,000 100 % $ 750,000 100 %
Variable expenses 108,000 72 % 78,000 20 % 84,000 40 % 270,000 36 %
Contribution margin $ 42,000 28 % 312,000 80 % $ 126,000 60 % 480,000 64 %
Fixed expenses 449,280 Net operating income $ 30,720 Dollar sales to break-even = Fixed expenses = $449,280 = $702,000
CM ratio 0.64
As shown by these data, net operating income is budgeted at $30,720 for the month and the estimated break-even sales is $702,000.
Assume that actual sales for the month total $750,000 as planned. Actual sales by product are: White, $300,000; Fragrant, $180,000; and Loonzain, $270,000.
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

Question

10-08-2022
Business

contestada

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 20 % 52 % 28 % 100 % Sales $150,000 100 % $390,000 100 % $ 210,000 100 % $ 750,000 100 %
Variable expenses 108,000 72 % 78,000 20 % 84,000 40 % 270,000 36 %
Contribution margin $ 42,000 28 % 312,000 80 % $ 126,000 60 % 480,000 64 %
Fixed expenses 449,280 Net operating income $ 30,720 Dollar sales to break-even = Fixed expenses = $449,280 = $702,000
CM ratio 0.64
As shown by these data, net operating income is budgeted at $30,720 for the month and the estimated break-even sales is $702,000.
Assume that actual sales for the month total $750,000 as planned. Actual sales by product are: White, $300,000; Fragrant, $180,000; and Loonzain, $270,000.
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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tripatsingh039 tripatsingh039 · Answer 1 · 2022-08-19T23:40:12+02:00

Contribution format income statement

Contribution margin income statements refer to the statement which shows the amount of contribution arrived after deducting all the expenses that are variable from the total revenue amount. Then, further fixed expenses are deducted from the contribution to get the net profit/loss of the business entity.

break-even point

The Break-Even Point The break-even point (BEP) in economics, business —and specifically cost accounting —is the point at which total cost and total revenue are equal, i.e. "even". There is no net loss or gain, and one has "broken even", though opportunity costs have been paid and capital has received the risk-adjusted, expected return.

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