Utease Corporation has many production plants across the midwestern United States. A newly opened plant, the Bellingham plant, produces and sells one product. The plant is treated, for responsibility accounting purposes, as a profit center. The unit standard costs for a production unit, with overhead applied based on direct labor hours, are as follows: Manufacturing costs : Direct materials $ 40 Direct labor 135 Variable overhead 30 Fixed overhead 45 Standard cost per unit $ 250 Budgeted selling and administrative costs: Variable $ 5 per unit Fixed $ 1,800,000 Expected sales activity: 20,000 units at $425 per unit Desired ending inventories: 10% of sales Assume this is the first year of operations for the Bellingham plant. During the year, the company had the following activity: Units produced 23,000 Units sold 21,500 Unit selling price $ 420 Direct labor hours worked 34,000 Direct labor costs $ 3,094,000 Direct materials purchased 50,000 pounds Direct material costs $ 1,000,000 Direct material used 50,000 pounds Actual fixed overhead $ 1,080,000 Actual variable overhead $ 620,000 Actual selling and administrative costs $ 2,000,000 In addition, all over- or underapplied overhead and all product cost variances are adjusted to cost of goods sold.
1.a. Prepare a production budget for the coming year based on the available standards, expected sales, and desired ending inventories. Units $ Planned Production of Finished Goods $ 2. b.Prepare a budgeted responsibility income statement for the Bellingham plant for the coming year. BELLINGHAM PLANT Budgeted Income Statement Year Ending December 31, 20 $ $ Operating Expenses: $ Total Operating Expense $ $ 3. c. Find the direct labor variances. Indicate if they are favorable or unfavorable and why they would be considered as such. Direct labor variances Labor efficiency variance $ Labor rate variance $ 4.d. Find the direct materials variances. Direct material variances Material quantity variance $ Material price variance $ 5.e-1 Find the total over- or underapplied overhead. Would cost of goods sold be a larger or smaller expense item after the adjustment for over- or underapplied overhead? overhead $ e-2 Would cost of goods sold be a larger or smaller expense item after the adjustment for over- or underapplied overhead? Smaller expense Larger expense 6.f. Calculate the actual plant operating profit for the year.
Operating profit $ 7.g. Prepare a flexible budget for the Bellingham plant for its first year of operations. Flexible budget variance $ Master budget variance $ check my workreferences 8.h. Assume Utease Corporation is planning to change its evaluation of business operations in all plants from the profit center format to the investment center format. If the average invested capital at the Bellingham plant is $8,950,000, compute the return on investment for the first year of operations. Use the DuPont method of evaluation to compute the return on sales and capital turnover for the plant. ROI % ROS % Capital Turnover % check my workreferences.