Utease Corporation has many production plants across the midwestern United State
ID: 2371241 • Letter: U
Question
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:
Assume this is the first year of operations for the Bellingham plant. During the year, the company had the following activity:
In addition, all over- or underapplied overhead and all product cost variances are adjusted to cost of goods sold
Prepare a production budget for the coming year based on the available standards, expected sales, and desired ending inventories. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
Prepare a budgeted responsibility income statement for the Bellingham plant for the coming year.(Input all amounts as positive values. Omit the "$" sign in your response.)
Find the total over- or underapplied (both fixed and variable) overhead. Would cost of goods sold be a larger or smaller expense item after the adjustment for over- or underapplied overhead? (Omit the "$" sign in your response.)
Calculate the actual plant operating profit for the year. (Omit the "$" sign in your response.)
Prepare a flexible budget for the Bellingham plant for its first year of operations. (Input all amounts as positive values. Omit the "$" sign in your response.)
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 $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 answers to 2 decimal places.
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:
Explanation / Answer
Theproduction budgetis prepared after thesales budget. Theproduction budgetlists thenumberof units that must be produced during each budget period to meet sales needs and to provide for the desired ending inventory. Production needs can be determined as follows.
Total need---------------------------------------
less beginning inventory--------------------
Required production--------------------------
XXXX
XXXX
--------
XXXX
XXXX
--------
XXXX
=====
Production requirements for a period are influenced by the desired level of ending inventory. Inventories should be carefully planned. Excessive inventories tie up funds and createstorage problems. Insufficient inventories can lead to lost sales or crash production efforts in the following period.
The following example illustrates the production budget format. The expected sales units are obtained from the sales budget of Company A. The planned ending units of 1st, 2nd and 3rd period are the beginning units in 2nd, 3rd and 4th period respectively.
Direct materials price varianceis the difference between the actual purchase price and standard purchase price of materials. Direct materials price variance is calculated either at the time of purchase ofdirect materialsor at the time when thedirect materialsare used. When this variance is computed at the time of purchase of materials it is calleddirect materials purchase price variance. When this variance is computed at the time of usage this is typically calleddirect materials price usage variance.
Followingformulais used to calculate materials price variance:
[Materials Price Variance = (Actual quantity purchased
Budgetedsales in units-------------------Add desired ending inventory------------
Total need---------------------------------------
less beginning inventory--------------------
Required production--------------------------
XXXX
XXXX
--------
XXXX
XXXX
--------
XXXX
=====
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.