Utease Corporation has several production plants nationwide. A newly opened plant in Dubuque 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 19,000 units or 39,900 direct labor hours):

Direct materials (2.6 pounds at $10)	$	26.00
Direct labor (2.1 hours at $60)		126.00
Variable overhead (2.1 hours at $10)		21.00
Fixed overhead (2.1 hours at $20)		42.00
Standard cost per unit	$	215.00
Budgeted selling and administrative costs:
Variable	$	4		per unit
Fixed	$	1,500,000

Expected sales activity: 15,000 units at $380 per unit

Desired ending inventories: 12% of sales

Assume this is the first year of operations for the Dubuque plant. During the year, the company had the following activity.

Units produced		18,000
Units sold		16,500
Unit selling price	$	375
Direct labor hours worked		37,300
Direct labor costs	$	2,275,300
Direct materials purchased		50,800		pounds
Direct materials costs	$	508,000
Direct materials used		50,800		pounds
Actual fixed overhead	$	1,000,000
Actual variable overhead	$	299,000
Actual selling and administrative costs	$	1,660,000

In addition, all over- or underapplied overhead and all product cost variances are adjusted to cost of goods sold.

Required:

a. Prepare a production budget for the coming year based on the available standards, expected sales, and desired ending inventories. Units 0 Planned production of finished goods 0 b. Prepare a budgeted responsibility income statement for the Dubuque plant for the coming year. DUBUQUE PLANT Budgeted Income Statement Upcoming Year Ending December 31 0 Operating expenses: Total operating expenses $ 0 $ 0 c. Find the direct labor variances. Indicate if they are favorable or unfavorable. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting Favorable, Unfavorable, and "None" for no effect.) Direct Labor Variances Labor efficiency variance Labor rate variance d. Find the direct materials variances (materials price variance and quantity variance). (Indicate the effect of each variance by selecting Favorable, Unfavorable, and "None" for no effect (i.e., zero variance).) Direct Material Variances Material quantity variance Material price variance e-1. Find the total over- or underapplied (both fixed and variable) overhead. e-2. Would cost of goods sold be a larger or smaller expense item after the adjustment for over- or underapplied overhead? Complete this question by entering your answers in the tabs below. Req E1 Req E2 Find the total over- or underapplied (both fixed and variable) overhead. overhead Complete this question by entering your answers in the tabs below. Req E1 Req E2 Would cost of goods sold be a larger or smaller expense item after the adjustment for over- or underapplied overhead? Would cost of goods sold be a larger or smaller expense item? f. Calculate the actual plant operating profit/loss for the year. Operating profit 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 Dubuque plant is $9,110,000, 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. (Round your percentage answers to 2 decimal places (i.e., 0.1234 should be considered as 12.34.)) ROI %. ROS % Capital turnover % i. 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 $50,000 per year, would the manager undertake the project? Yes No