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:

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:

Dollar sales to break-even	=	Fixed expenses	=	$226,200	= $435,000
		CM ratio		0.52

As shown by these data, net operating income is budgeted at $163,800 for the month and the estimated break-even sales is $435,000.

Assume that actual sales for the month total $750,000 as planned. Actual sales by product are: White, $240,000; Fragrant, $300,000; and Loonzain, $210,000.

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.

 

Explanation

1.

Total contribution margin: $322,500 ÷ $750,000 = 43%

2.

Break-even sales would be:

Dollar sales to break even	=	Fixed expenses
		CM ratio

	=	$226,200	= $526,047
		0.43

Here