hw 3.3

Gold Star Rice, Ltd., of Thailand exports Thai rice throughout Asia. The company grows three varieties of riceFragrant, White, and Loonzain. Budgeted sales 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	$	340,800	100%	$	142,000	100%	$	227,200	100%		$	710,000		100%
Variable expenses		102,240	30%		113,600	80%		124,960	55%			340,800		48%
Contribution margin	$	238,560	70%	$	28,400	20%	$	102,240	45%			369,200		52%
Fixed expenses												228,280
Net operating income											$	140,920

Dollar sales to break even =	Fixed expenses	=	$228,280	= $439,000
	Unit CM		$0.52

As shown by these data, net operating income is budgeted at $140,920 for the month and break even sales at $439,000.

Assume that actual sales for the month total $710,000 as planned. Actual sales by product are: White, $227,200; Fragrant, $284,000; and Loonzain, $198,800.

The Shirt Works sells a large variety of tee shirts and sweatshirts. Steve Hooper, the owner, is thinking of expanding his sales by hiring high school students, on a commission basis, to sell sweatshirts bearing the name and mascot of the local high school. These sweatshirts would have to be ordered from the manufacturer six weeks in advance, and they could not be returned because of the unique printing required. The sweatshirts would cost Hooper $21.00 each with a minimum order of 240 sweatshirts. Any additional sweatshirts would have to be ordered in increments of 50.

Since Hoopers plan would not require any additional facilities, the only costs associated with the project would be the costs of the sweatshirts and the costs of the sales commissions. The selling price of the sweatshirts would be $42.00 each. Hooper would pay the students a commission of $5.00 for each shirt sold.