Gold Star Rice, Ltd., of Thailand, exports Thai rice throughout Asia. The company grows three varieties of rice?Fragrant, White, and Loonzain. Budgeted sales by product and in total for the coming month are shown in the following table (the currency in Thailand is the baht, denoted by B):

As shown by these data, net income is budgeted at B61,440 for the month and break-even sales at B1,404,000. Assume that actual sales for the month total B1,500,000 as planned. Actual sales by product are as follows: White, B600,000; Fragrant, B360,000; and Loonzain, B540,000.

Required:

1. Prepare a contribution margin income statement for the month on the basis of actual sales data. Present the income statement in the format shown above.

2. Compute the break-even sales for the month on the basis of your actual data.

3. Considering the fact that the company met its B1,500,000 sales budget for the month, the president is shocked at the results shown on your income statement in part (1). Prepare a brief memo for the president explaining why both the operating results and break-even sales are different from what was budgeted.

Transcribed Image Text:

Product Loonzain White Fragrant Total 20% Percentage of total sales 52% 28% 100% 100% Sales вз00,000 100% B780,000 100% B420,000 B1,500,000 100% Less: Variable expenses 216,000 156,000 72 168,000 40 540,000 36 B 84,000 B 624,000 80% 60% 64% Contribution margin 28% B252,000 960,000 Less: Fixed ex penses 898,560 Net income B 61,440 Fixed ex penses, B898,560 CM ratio, 0.64 Break-even sales : = B1,404,000