The following information applies to the questions displayed below Utease Corporation has many production plants across the midwestern United States. A newly opened pliant the Bellingham plant, produces and sells one product. The plent is treated, for responsibility accounting purposes, as a profit center. The unit standerd costs for a production unit, with overheed applied besed on direct labor hours, are as follows Menufecturing costs (per unit based on expected activity of 24,000 units or 36,000 direct labor hours) s 40.00 35.00 30.00 45.00 Direct meterials (2 pounds at $20) Direct labor (15 hours at $90) Variable overhead 1.5 hours at $20) Foed overhead (1.5 hours at $30) $25000 Standard cost per unit Budgeted selling and administrative costs: $5 per unit $1,800,000 Variable Fed Expected sales activity 20,000 units at $425.00 per unit Desired ending inventories: 10% of sales Assume this is the first year of operations for the Bellingham plant. During the yeer, the compeny hed the following activity 23,000 21,500 420 34,000 3,094,000 Units produced Units sold Unit selling price Direct labor hours worked Direct labor costs Direct materials purchased Direct materials costs Direct materials used Actual fixed overhead Actual veriable overhead Actual selling and administrative costs 50,000 pounds $ 1000,000 50,000 pounds $ 1,080,000 620,000 $2,000,000 In addition, all over-or underapplied overhead and all product cost veriances are adjusted to cost of goods sold rey 05 07 2015 QC CS-15352 Instructions a. Prepare a production budget for the coming year based on the available standards, espected sales, and desired ending inventories. D. Prepare a budgeted responsibility income statement for the elt for he comi a budgeted responsibility income statement for the Bellingham plant for the coming year y th Find the direct labor variances. Indicate if they are favorable or unfavorable and wh c. would be considered as such. Find the direct materials variances (materials price variance and quantity variance). Find the total over or underapplied (both fixed and variable) overhead. Would cost of g d. ld be a larger or smaller expense item after the adjustment for over- or underapplied overhead e. f. Calculate the actual plant operating profit for the year. . Use a flexible budget to explain the difference between the budgeted operating profit and the actual operating profit for the Bellingham plant for its first year of operations. What part of the difference do you believe is the plant manager's responsibility? 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 investecd capital at the Bellingham plant is $8,050,000, compute the return on investment (ROI) for the first year of operations. Use the DuPont method of evaluation to compute the return on sales (ROS) and capital turnover (CT) for the plant. Assume that under the investment center evaluation plan the plant manager will be awarded a bonus based on ROI. If the manager has the opportunity in the coming year to invest in new equipment for $600,000 that will generate incremental earnings of $108,000 per year would the manager undertake the project? Why or why not? What other evaluation tools could Utease use for its plants that might be better? h. i. . The chief financial officer of Utease Corporation wants to include a charge in each iivestment center's income statement for corporatewide administrative expenses. S plant manager's annual bonus be based on plant ROI after deducting the corporatewide administrative fee? Why or why not? The following information applies to the questions displayed below Utease Corporation has many production plants across the midwestern United States. A newly opened pliant the Bellingham plant, produces and sells one product. The plent is treated, for responsibility accounting purposes, as a profit center. The unit standerd costs for a production unit, with overheed applied besed on direct labor hours, are as follows Menufecturing costs (per unit based on expected activity of 24,000 units or 36,000 direct labor hours) s 40.00 35.00 30.00 45.00 Direct meterials (2 pounds at $20) Direct labor (15 hours at $90) Variable overhead 1.5 hours at $20) Foed overhead (1.5 hours at $30) $25000 Standard cost per unit Budgeted selling and administrative costs: $5 per unit $1,800,000 Variable Fed Expected sales activity 20,000 units at $425.00 per unit Desired ending inventories: 10% of sales Assume this is the first year of operations for the Bellingham plant. During the yeer, the compeny hed the following activity 23,000 21,500 420 34,000 3,094,000 Units produced Units sold Unit selling price Direct labor hours worked Direct labor costs Direct materials purchased Direct materials costs Direct materials used Actual fixed overhead Actual veriable overhead Actual selling and administrative costs 50,000 pounds $ 1000,000 50,000 pounds $ 1,080,000 620,000 $2,000,000 In addition, all over-or underapplied overhead and all product cost veriances are adjusted to cost of goods sold rey 05 07 2015 QC CS-15352 Instructions a. Prepare a production budget for the coming year based on the available standards, espected sales, and desired ending inventories. D. Prepare a budgeted responsibility income statement for the elt for he comi a budgeted responsibility income statement for the Bellingham plant for the coming year y th Find the direct labor variances. Indicate if they are favorable or unfavorable and wh c. would be considered as such. Find the direct materials variances (materials price variance and quantity variance). Find the total over or underapplied (both fixed and variable) overhead. Would cost of g d. ld be a larger or smaller expense item after the adjustment for over- or underapplied overhead e. f. Calculate the actual plant operating profit for the year. . Use a flexible budget to explain the difference between the budgeted operating profit and the actual operating profit for the Bellingham plant for its first year of operations. What part of the difference do you believe is the plant manager's responsibility? 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 investecd capital at the Bellingham plant is $8,050,000, compute the return on investment (ROI) for the first year of operations. Use the DuPont method of evaluation to compute the return on sales (ROS) and capital turnover (CT) for the plant. Assume that under the investment center evaluation plan the plant manager will be awarded a bonus based on ROI. If the manager has the opportunity in the coming year to invest in new equipment for $600,000 that will generate incremental earnings of $108,000 per year would the manager undertake the project? Why or why not? What other evaluation tools could Utease use for its plants that might be better? h. i. . The chief financial officer of Utease Corporation wants to include a charge in each iivestment center's income statement for corporatewide administrative expenses. S plant manager's annual bonus be based on plant ROI after deducting the corporatewide administrative fee? Why or why not