Gold Star Rice, Ltd., of Thailand exports Thai rice throughout Asia. The company grows three varieties of rice—White, Fragrant, and Loonzain. Budgeted sales by product and in total for the coming month are shown below White ($) Fragrant ($) Loonzain ($) Percentage of total sales 20% 52% 28% Actual Sales 150,000 390,000 210,000 Variable expenses 108,000 78,000 84,000 Budgeted Sales 300,000 180,000 270,000 Fixed expenses 449,280 Requirements Prepare contribution format income statement for the month based on budgeted sales. Also calculate overall breakeven point in revenue. Prepare contribution format income statement for the month based on actual sales. Also calculate overall breakeven point in revenue using actual sales data. Explain why the results of (a) and (b) are different despite the fact that company’s total actual sales are same as of budgeted sales
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Gold Star Rice, Ltd., of Thailand exports Thai rice throughout Asia. The company grows three varieties of rice—White, Fragrant, and Loonzain. Budgeted sales by product and in total for the coming month are shown below
|
|
White ($) |
Fragrant ($) |
Loonzain ($) |
|
Percentage of total sales |
20% |
52% |
28% |
|
Actual Sales |
150,000 |
390,000 |
210,000 |
|
Variable expenses |
108,000 |
78,000 |
84,000 |
|
Budgeted Sales |
300,000 |
180,000 |
270,000 |
|
Fixed expenses |
449,280 |
Requirements
- Prepare contribution format income statement for the month based on budgeted sales. Also calculate overall breakeven point in revenue.
- Prepare contribution format income statement for the month based on actual sales. Also calculate overall breakeven point in revenue using actual sales data.
- Explain why the results of (a) and (b) are different despite the fact that company’s total actual sales are same as of budgeted sales
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