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 (per unit based on expected activity of 24,000 units or 36,000 direct labor hours):

Direct materials (2.0 pounds at $20)	$	40.00
Direct labor (1.5 hours at $90)		135.00
Variable overhead (1.5 hours at $20)		30.00
Fixed overhead (1.5 hours at $30)		45.00
Standard cost per unit	$	250.00
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 materials costs	$	1,000,000
Direct materials 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.

Please answer H - J and show computations. Thank you!

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 $8,050,000, 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.

I. Assume that under the investment center valuation 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?

J. The chief financial officer of Utease Corporation wants to include a charge in each investment center's income statement for corporatewide administrative expenses. Should the Bellingham plant manager's annual bonus be based on plant ROI after deducting the corporatewide administrative fee? Why or why not?