Reference no: EM131677637
Problem - Sales Mix; Multiproduct Break-Even Analysis
Gold Star Rice, Ltd., of Thailand exports Thai rice throughout Asia. The company grows three varieties of rice-White, Fragrant, and Loonzain Budgeted sees 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
|
$316,800
|
100%
|
$132,000
|
100%
|
$211,200
|
$100%
|
$660,000
|
100%
|
|
Variable expenses
|
95,040
|
30%
|
105,600
|
80%
|
116,160
|
55%
|
316,800
|
48%
|
|
Contribution margin
|
$221,760
|
70%
|
$26,400
|
20%
|
$95,040
|
45%
|
343,200
|
52%
|
|
Fixed expenses
|
|
|
|
|
|
|
234,000
|
|
|
Net operating income
|
|
|
|
|
|
|
$109,200
|
|
Dollar sales to break even = Fixed expenses/CM ratio = $234,000/0.52 = $450,000
As shown by these data, net operating income is budgeted at $109.200 for the month and the estimated break-even sales is $450.000.
Assume that actual sales for the month total $660,000 as planned. Actual sales by product are: White, $211,200; Fragrant, $264,000; and Loonzain, $184,800.
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.