# Littrell Company Accounting Assingment Help With Solution

## Littrell Company Accounting Assingment Help With Solution

CASE PROBLEMS FOR COST ACCOUNTING

1. Breakeven Analysis

Lone Star Enterprises sells a single product. The selling price is \$40 per unit, and the variable expense is \$32 per unit.

The company’s most recent annual contribution format income statement is presented below:

 Sales \$ 200,000 Variable expenses 160,000 Contribution Margin 40,000 Fixed expenses 30,000 Net Operating Income \$   10,000

Required:

1. Calculate the contribution margin per unit \$_______________.
2. Calculate the contribution margin ratio ________%.
3. Calculate the break-even point in sales dollars \$____________.
4. Calculate the break-even point in units sold _______________.
5. Calculate the units that must be sold to obtain a net operating income of \$20,000. Units to be sold ______________.

1. Flexible Budget and Performance Report

1. Lone Star Enterprises uses the following cost formulas in its flexible budget for manufacturing overhead.

 Item Cost Formula Indirect labor \$21,000 per year, plus \$.50 per machine hour Indirect material \$10,000 per year, plus \$.80 per machine hour Factory utilities \$6,000 per year, plus \$.30 per machine hour Factory depreciation \$25,000 per year

Using the above cost formulas, prepare a flexible budget according to the following format:

 Overhead Costs Cost per Machine hour Machine Hours Variable overhead costs: 8,000 10,000 12,000 \$__________ ______ ______ ______ \$__________ ______ ______ ______ \$__________ ______ ______ ______ \$__________ ______ ______ ______ \$__________ ______ ______ ______ Total variable costs \$__________ ______ ______ ______ Fixed overhead costs: \$__________ ______ ______ ______ \$__________ ______ ______ ______ \$__________ ______ ______ ______ \$__________ ______ ______ ______ \$__________ ______ ______ ______ Total fixed costs \$__________ ______ ______ ______ Total overhead costs ______ ______ ______

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1. Flexible Budget and Performance Report

1. Refer to the flexible budget data in Part A. The standard time to complete one unit of product is 1.6 machine hours. Last year the company budgeted to operate at the 10,000 machine hour level of activity. During the current year Lone Star Enterprises incurred the following actual activity and costs:

 Units Produced 5,000 Actual machine hours worked 8,500

 Variable Fixed Indirect labor \$   3,300 \$   21,700 Indirect material 6,700 10,300 Food utilities 2,600 5,900 Factory depreciation 25,000

Required:

Prepare a performance report for the year using the format that follows.

Performance Report

Lone Star Enterprises

Budgeted machine hours __________

Actual machine hours       __________

Standard machine hours   __________

 Variable overhead costs: Cost Formula (per MH) Actual costs 8,500 Budget Based on ____ MHs Spending or Budget Variance _____________________ _______ ________ ________ ________ _____________________ _______ ________ ________ ________ _____________________ _______ ________ ________ ________ _____________________ _______ ________ ________ ________ Total variable costs _______ Fixed overhead costs: _____________________ ________ ________ ________ _____________________ ________ ________ ________ _____________________ ________ ________ ________ _____________________ ________ ________ ________ Total fixed costs ________ ________ ________ Total overhead costs ________ ________ ________

III. Direct Material and Direct Labor Variance Analysis

Littrell Company produces chairs and has determined the following direct cost categories and budgeted amounts:

Standard Inputs      Standard Cost

Category                    for 1 output               per input

Direct Materials                         1.00                      \$7.50

Direct Labor                              0.35                        9.00

Actual performance for the company is shown below:

Actual output: (in units)                    4,000

Direct Materials:

Materials costs                         \$30,225

Input purchased and used            3,900

Actual price per input                   \$7.75

Direct Labor:

### Labor costs                                \$11,470

Labor-hours of input                      1,240

Actual price per hour                     \$9.25

Required:

1. Calculate the price and usage variances for direct materials and the direct labor rate and efficiency variance of the direct labor?

1. From the following lists, select the most probable cause and responsible manager related to each variance listed above?
2. i) List of variance causes
• Quality of Material Purchased Lower
• Quality of Material Purchased Higher
• Market Price Per unit of Material Higher than Prior Year
• Market Price Per unit of Material Lower than Prior year
• More experienced Production Workers Scheduled
• Less experienced Production Workers Scheduled
1. ii) List of Responsible Managers
• Treasurer
• Controller
• Vice President of Finance
• Vice President of Marketing
• Labor Union Representative