Gold Star Rice, Ltd., of Thailand exports Thai rice throughout Asia. The company grows thr
"Gold Star Rice, Ltd., of Thailand exports Thai rice throughout Asia. The company grows three varieties of rice—Fragrant, White, and Loonzain. (The currency in Thailand is the baht, which is denoted by B.) Budgeted sales by product and in total for the coming month are shown below
White Fragrant Loonzain Total
Percentage of total sales 20% 52% 28% 100%
Sales B 150,000 100% B 390,000 100% B 210,000 100% B 750,000 100%
Variable expenses 108,000 72% 78,000 20% 84,000 40% 270,000 36%
Contribution margin B 42,000 28% B 312,000 80% B 126,000 60% 480,000 64%
Fixed expenses 449,280
Net operating income B 30,720
Dollar sales to break even= fixed expenses/ CM ratio= B449,280/0.64=B702,000
As shown by these data, net operating income is budgeted at B30,720 for the month and break-even sales at B702,000.
Assume that actual sales for the month total B750,000 as planned. Actual sales by product are: White, B300,000; Fragrant, B180,000; and Loonzain, B270,000.
Prepare a contribution format income statement for the month based on actual sales data. Present the income statement in the format shown on the prior page.
Compute the break-even point in sales Baht for the month, based on your actual data.
Considering the fact that the company met its B750,000 sales budget on your actual data. dent 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 sales dollars are different from what was budgeted.