guys i just need some guide on 4 21 no. 3 question. please no.2 pics is my solut
ID: 2339883 • Letter: G
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guys i just need some guide on 4 21 no. 3 question. please
no.2 pics is my solution for 1 and 2 question
PROBLEM 4-21 Sales Mix: Multiproduct Break-Even Analysis (L09) Gold Star Rice, Ltd., of Thailand exports Thai rice throughout Asia. The company grows varneties of nce-Fragrant, White, and Loonzain. Budgeted sales by product and in total for the coming month are shown below: Product Total White 20% 108,000 72% 78,000 20% 84,000 40% 270,000 36% 42.000 28% ssi2.000 80% $126,000 60% 480,000- 100% Percentage of total sales Sales Variable expenses Contribution margin... 52% 28% $150,000 100% s390,000 100% $210,000 100% S750.000 1009 449,280 30,720 Fixed expenses Net operating income _.. . Dollar sales to Fixed expenses $449280$702.000 break even CM ratio 0.64 As shown by these data, net operating income is budgeted at $30,720 for the month and break- even sales at $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 actual sales data. Present the income statement in the format shown above. Compute the break-even point in dollar sales for the month based on your actual data. Considering the fact that the company met its $750,000 sales budget for the month, the pres- ident is shocked at the results shown on your income statement in (1) above. Prepare a brief memo for the president explaining why both the operating results and the break-even point in dollar sales are different from what was budgeted 2 3. PROBLEM 4-22 Ba sics of CVP Analysis; Cost Structure L01, LO 3, LO4, Los, L0561Explanation / Answer
1.
Break even Sales = Fixed Costs/ Contibution margin ratio
=449280/0.52 = 864000
3. There are several reasons why a company's break-even point will increase. One reason is an increase in the company's fixed costs, such as rent, depreciation, salaries of managers and executives, etc.
A second reason for an increase in a company's break-even point is a reduction in the contribution margin. Contribution margin is sales minus the variable costs and variable expenses. An increase in the variable costs and expenses without a corresponding increase in selling prices will cause the contribution margin to shrink. With less contribution margin, it will take more sales in order to cover the fixed costs and fixed expenses. Of course, a decrease in selling price will also increase the break-even point.In this case the variable costs increase so that contibution margin got decreased which results in the decrease of Sales from Break even Sales and the result is decrease in profit
Another reason for a change in the break-even point is a change in the mix of products or services delivered. In other words, some products have higher contribution margins, and some products have lower contribution margins. If a company continues to sell the same total number of units of product, but a greater proportion of the units sold have a lower contribution margin, the company's break-even point will increase.
Thank You
White Fragrant Loonzain Total Sales 300000 100% 180000 100% 270000 100% 750000 100% Less: Variable Expense 216000 72% 36000 20% 108000 40% 360000 48% Contribution 84000 28% 144000 80% 162000 60% 390000 52% Fixed Costs 449280 Net operating loss (59280)Related Questions
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