82 - UTEASE CORPORATION-DUE THURSDAY, 4/21/16 Questions 1-8 (of 8) Comprehensive

Question

82 - UTEASE CORPORATION-DUE THURSDAY, 4/21/16 Questions 1-8 (of 8) Comprehensive Problem 1 LThe following information applies to the questions displayed below) 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 unlt based on expected activity of 22.000 units or 52,800 direct labor hoursh Direct materials (2.9 pounds at $10) Direct labor (2.4 hours at $80) Variable overhead (2.4 hours at $10) Fixed overhead (2.4 hours at $20) 29 192 24 48 Standard cost per unit 293 Budgeted selling and administrative costs 6 per unit Fxed S 1,000,000 42 songs, 2:52:50 total time, 325.8 MB OF3 FI F2 #5 F6 F7

Explanation / Answer

(6) *(Part f)

Actual operating profit ($) = Actual Sales - (Direct labor + Direct material + Actual fixed overhead + Actual variable overhead + Actual Selling costs)

= (19,500 x 445) - [4,041,900 + 649,000 + 800,000 + 428,000 + 1,308,000)

= 8,677,500 - 7,226,900

= 1,450,600

(Part g)

ROI = Actual operating profit / Average invested capital = $1,450,600 / $9,170,000 = 0.1582 = 15.82%

ROS = Actual operating profit / Actual sales = $1,450,600 / $8,677,500** = 0.1672 = 16.72%

**As computed in Part f

As per Du Pont, ROI = ROS x Capital turnover

0.1582 = 0.1672 x Capital turnover

Capital turnover = 0.1582 / 0.1672 = 0.95 = 95.00%

NOTE: Since you've already computed Parts a to e, I've answered the rest.

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