Question

chapter 5 homework
saved
help save & exit submit
check my work
9
0.83 points
ebook
print
references
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
sales	$ 355,200 100%	$ 148,000 100%	$ 236,800 100%	$ 740,000 100%
variable expenses	106,560 30%	118,400 80%	130,240 55%	355,200 48%
contribution margin	$ 248,640 70%	$ 29,600 20%	$ 106,560 45%	384,800 52%
fixed expenses				226,200
net operating income				$ 158,600

dollar sales to break-even = fixed expenses ÷ cm ratio = $226,200 ÷ 0.52 = $435,000
as shown by these data, net operating income is budgeted at $158,600 for the month and the estimated break-even sales is $435,000.
assume actual sales for the month total $740,000 as planned; however, actual sales by product are white, $236,800; fragrant, $296,000; and loonzain, $207,200.
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.

complete this question by entering your answers in the tabs below.
required 1 required 2
prepare a contribution format income statement for the month based on the actual sales data.

gold star rice, limited
product	white	fragrant	loonzain	total
percentage of total sales	%	%	%	%
	%	%	%	%
	%	%	%	%
	%	%	%	%
	%	%	%	%

< previous next >
9 of 12 prey next >

Explanation:

Step1: Calculate % of total actual sales

White: $\frac{236800}{740000} \times 100 = 32\%$
Fragrant: $\frac{296000}{740000} \times 100 = 40\%$
Loonzain: $\frac{207200}{740000} \times 100 = 28\%$
Total: $100\%$

Step2: Calculate actual variable expenses

White: $236800 \times 30\% = 71040$
Fragrant: $296000 \times 80\% = 236800$
Loonzain: $207200 \times 55\% = 113960$
Total: $71040 + 236800 + 113960 = 421800$

Step3: Calculate actual contribution margin

White: $236800 - 71040 = 165760$
Fragrant: $296000 - 236800 = 59200$
Loonzain: $207200 - 113960 = 93240$
Total: $165760 + 59200 + 93240 = 318200$

Step4: Calculate % of variable expenses

White: $30\%$, Fragrant: $80\%$, Loonzain: $55\%$
Total: $\frac{421800}{740000} \times 100 = 57\%$

Step5: Calculate % of contribution margin

White: $100\% - 30\% = 70\%$
Fragrant: $100\% - 80\% = 20\%$
Loonzain: $100\% - 55\% = 45\%$
Total: $\frac{318200}{740000} \times 100 = 43\%$

Step6: Calculate net operating income

Net operating income = $318200 - 226200 = 92000$

Step7: Compute break-even sales

Break-even = $\frac{\text{Fixed expenses}}{\text{Total CM ratio}} = \frac{226200}{0.43} = 526046.51$

Answer:

1. Contribution Format Income Statement

	White	Fragrant	Loonzain	Total
Sales	$236,800 (100%)	$296,000 (100%)	$207,200 (100%)	$740,000 (100%)
Variable expenses	$71,040 (30%)	$236,800 (80%)	$113,960 (55%)	$421,800 (57%)
Contribution margin	$165,760 (70%)	$59,200 (20%)	$93,240 (45%)	$318,200 (43%)
Fixed expenses				$226,200
Net operating income				$92,000

2. Break-even Point in Dollar Sales

$\$526,046.51$