Problem 521 Sales Mix Multiproduct BreakEven Analysis LO59 G

Problem 5-21 Sales Mix; Multiproduct Break-Even Analysis [LO5-9]

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:

As shown by these data, net operating income is budgeted at $133,640 for the month and the estimated break-even sales is $433,000.

Assume that actual sales for the month total $690,000 as planned. Actual sales by product are: White, $220,800; Fragrant, $276,000; and Loonzain, $193,200.

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.

	Product
	White	Fragrant	Loonzain	Total
Percentage of total sales		48	%				20	%				32	%				100	%
Sales	$	331,200		100	%	$	138,000		100	%	$	220,800		100	%	$	690,000		100	%
Variable expenses		99,360		30	%		110,400		80	%		121,440		55	%		331,200		48	%
Contribution margin	$	231,840		70	%	$	27,600		20	%	$	99,360		45	%		358,800		52	%
Fixed expenses																	225,160
Net operating income																$	133,640

Solution

1)                                                     product                                                             White Fragrant Loonzain total percentage of total sales 32.00% 40.00% 28.00% Sales 220,800 100% 276,000 100% 193,200 100% 690,000 100% Variable expenses 66240 30% 220800 80% 106260 55% 393300 57.00% Contribution margin 154560 70% 55200 20% 86940 45% 296700 43.00% Fixed expenses 225,160 Net operating income 71,540 2) Dollar sales to breakeven 225,160/43% 523627.9 or $523,628