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:

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, B 180,000: and Loonzain, B270,000.

Required:

1. Prepare a contribution format income statement for the month based on actual sates data. Present the income statement in the format shown on the prior page.

2. Compute the break-even point in sales dollars for the month based on your actual data.

3. Considering the fact that the company met its B750,000 sales budget for the month, the president 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.

Transcribed Image Text:

Product Loonzain White Fragrant Total Percentage of total sales Sales .... Variable expenses Contribution margin . Fixed expenses Net operating income. 52% 28% 20% B150,000 100% B750,000 100% 40% 100% 100% 20% B390,000 B210,000 84,000 100% 270,000 480,000 72% 108,000 B 42,000 78,000 36% 64% 28% B312,000 80% B126,000 60% 449,280 B30,720