Lone Star AccountIng Assingment Help With Solution

Lone Star AccountIng Assingment Help With Solution

I. 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
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 ______________.


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II. Flexible Budget and Performance Report
A. 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 ______ ______ ______

II. Flexible Budget and Performance Report
B. 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
Actual Overhead costs:
Variable Fixed
Indirect labor $ 3,300 $ 21,700
Indirect material 6,700 10,300
Food utilities 2,600 5,900
Factory depreciation 25,000
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
a. Calculate the price and usage variances for direct materials and the direct labor rate and efficiency variance of the direct labor?
b. From the following lists, select the most probable cause and responsible manager related to each variance listed above?
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
ii) List of Responsible Managers
• Treasurer
• Controller
• Vice President of Finance
• Vice President of Marketing
• Labor Union Representative
• Purchasing Agent
• Production Manager


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