Question
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
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 35,000 units or 45,500 direct labor hours):
Direct materials (2.0 pounds at $12) | $ | 24.00 | ||
Direct labor (1.3 hours at $80) | 104.00 | |||
Variable overhead (1.3 hours at $10) | 13.00 | |||
Fixed overhead (1.3 hours at $20) | 26.00 | |||
Standard cost per unit | $ | 167.00 | ||
Budgeted selling and administrative costs: | ||||
Variable | $ | 3 | per unit | |
Fixed | $ | 1,600,000 | ||
Expected sales activity: 31,000 units at $300 per unit
Desired ending inventories: 18% 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 | 34,000 | |||
Units sold | 32,500 | |||
Unit selling price | $ | 295 | ||
Direct labor hours worked | 43,700 | |||
Direct labor costs | $ | 3,539,700 | ||
Direct materials purchased | 72,000 | pounds | ||
Direct materials costs | $ | 864,000 | ||
Direct materials used | 72,000 | pounds | ||
Actual fixed overhead | $ | 1,300,000 | ||
Actual variable overhead | $ | 355,000 | ||
Actual selling and administrative costs | $ | 1,793,000 | ||
In addition, all over- or underapplied overhead and all product cost variances are adjusted to cost of goods sold.
Comprehensive Problem 6 (Algo) Part f
f. Calculate the actual plant operating profit/loss for the year.
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