P3–11 Sales mix assumptions; break-even analysis Time allowed: 35 minutes 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, profit 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.
Required 1 Prepare a contribution profit and loss account for the month based on actual sales data. Present the profit and loss account in the format shown above.
2 Compute the break-even sales 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 managing director is shocked at the results shown on your profit and loss account in Question 1 above. Prepare a brief memo for the MD explaining why both the operating results and break-even sales are different from what was budgeted.

Transcribed Image Text:

Product Percentage of total sales Percentage of sales Less variable expenses Contribution margin Less fixed expenses Profit White 20% B 42,000 28% 78,000 B312,000 Fragrant Loonzain Total B150,000 100% 108,000 72% 52% 8390,000 100% 20% 28% B210,000 100% 100% 8750,000 100% 80% 84,000 B126,000 40% 270,000 36% 60% 480,000 64% 449,280 B30,720