PLEASE COMPLETE USING EXCEL TEMPLATE. COMPREHENSIVE PROBLEM $6$

UTEASE CORPORATION

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.

Assume this is the first year of operations for the Dubuque 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.

Instructions

a$.$ Prepare a production budget for the coming year based on the available standards, expected sales, and desired ending inventories.

b$.$ Prepare a budgeted responsibility income statement for the Dubuque plant for the coming year.

c$.$ Find the direct labor variances. Indicate if they are favorable or unfavorable and why they would be considered as such.

d$.$ Find the direct materials variances $($materials price variance and quantity variance$).$

e$.$ 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?

f$.$ Calculate the actual plant operating profit for the year.

g$.$ Use a flexible budget to explain the difference between the budgeted operating profit and the actual operating profit for the Dubuque

plant for its first year of operations. What part of the difference do you believe is the plant manager's responsibility?

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 $$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.